Taking on Apple's
It doesn't matter whether you're the market leader in flash memory. Sorry, SanDisk
Competing against the iPod doesn't so much involve butting heads with Apple as it does settling for a distant second place. However, Apple may have finally met its match in an unlikely competitor -- one that's riding a hot streak, and already immensely popular with a young audience.
Are you up to taking the Nintendo (OTC BB: NTDOY.PK) challenge, Apple?
The Nikkei business daily is reporting that the widely-used Nintendo DS is about to receive a major upgrade. The new model will come with a built-in camera, store digital music, and build on the existing version's wireless connectivity. It should hit the market by the end of the year.
Is Apple shivering in its Cupertino booties? No.
The new Nintendo handheld's success still has a few questions to answer:
- Will it play video, a major component of the iPod these days -- not to mention the DS's rival, Sony's
- Will the market take to a flip-top clamshell design for digital music playback? It's great for gaming, but unless there are exterior controls, it'll be a pain for folks primarily interested in playing music.
- Why should Nintendo succeed where so many others have failed?
That last question is huge. Everybody competes with the iPod these days. Most cell phone handsets store music, surf the Web, and play video. Even the corporate world is getting in on the fun, as Research In Motion's
So why should Apple be worried about Nintendo? In just four years, Nintendo has sold more than 77 million DS systems. One can always argue that Nintendo skews younger, but that dynamic is changing, as Nintendo broadens its reach to appeal to older audiences with titles like the cerebral workout Brain Age. Besides, is that so bad? Handset makers haven't really threatened the iPod because those gadgets typically skew older. You don't see many octogenarians with iPod earbuds on.
In a world where gadgetry is being consolidated, if someone owns a DS and an iPod -- and the new DS can do both -- why buy an iPod and carry an extra device around?
It cuts both ways
This isn't the first time that Apple and Nintendo have been thrown into the wrestling ring together. Nintendo was the home team earlier this year, when analysts began to wonder if this summer's launch of Apple's App Store for iPhone and iPod touch devices would threaten Nintendo. Some of the more popular Apple downloads are casual games, so Nintendo can't ignore the evolution.
It's not Apple that is prompting the multimedia upgrade. It is actually the growing popularity of Sony's PSP, particularly in Japan, that is forcing Nintendo to keep up with the changes. Taking on Apple is simply a byproduct of the new spec sheet.
This does not mean that diehard gamers and digital media consumers are the same. GameStop
Naturally, GameStop will be loading up on the next-generation DS whenever it arrives. It's going to sell briskly as a gaming device, for sure. Its initial appeal may not also extend to the podcasting set, but that will come in time. Parents who have a choice between buying a DS or an iPod touch for their kids will likely to opt for the multifaceted DS, completely unaware of the gateway drug they're bringing into their homes. Nintendo could be younger gamers' first introduction to digital music.
If Apple isn't nervous, it just hasn't taken the time to connect the dots.
Other ways to split the difference:
Can Nintendo really derail the iPod? Post your thoughts in the comment box below. Microsoft is a Motley Fool Inside Value recommendation. Nintendo, Apple, and GameStop are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletter service free for 30 days.
Longtime Fool contributor Rick Munarriz is a fan of both Nintendo and Apple, but doesn't own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.