The 3DS -- Nintendo's (OTC BB: NTDOY.PK) best hope at regaining its now fading relevance -- is finally coming. The Japanese gaming pioneer's updated handheld will hit the stateside market March 27.
Last week's announcement has fellow Fool Anders Bylund excited, but I'm not all that optimistic. Despite the killer specs, it's the wrong product at the wrong time with the wrong price.
Let me go over the five reasons why I believe the 3DS is going to fizzle rather than sizzle in two months.
1. It's too late
Gadgetry is evolving with every holiday season. Netbooks were all the rage in 2009, but they were bumped out by tablets in 2010. Gaming is also evolving quickly, and this means that Nintendo blew it back in September, when it added insult to injury by delaying the 3DS in the United States after hosing down its near-term financials.
I still don't think the 3DS would've been a hit had it come to retailers before the 2010 holiday season, but how many gamers have $250 burning holes in their pockets in March?
2. No one cares about 3-D outside of the multiplex
Television manufacturers put plenty of weight behind 3-D televisions this year, only to find that consumers really don't care.
The only real winners of 3-D have been leading 3-D outfitter RealD (NYSE: RLD) and super-sized cinematic experience creator IMAX (Nasdaq: IMAX), along with the movie studios and exhibitors that have turned to RealD and IMAX to boost average ticket prices. Outside of the multiplex, 3-D isn't much of a novelty.
Some may argue that home theaters have been slow to embrace 3-D because of the cumbersome specs, and that technology will make that point moot. If so, 3DS is sitting pretty as a glasses-free system.
But I don't buy it. Nintendo may have revolutionized the motion-based controller before Sony (NYSE: SNE) and Microsoft (Nasdaq: MSFT) hopped on board last year, but depth in a small screen is like a Lamborghini in a school's speed zone. Folks won't care.
3. Toddlers are out
Nintendo has always appealed to the smallest of gamers, and the durable nature of 3DS' predecessors make it appealing for parents to hand over to entertainment-seeking toddlers.
Unfortunately, the 3DS may be a health risk. The product's label warns that children under six shouldn't use the 3-D functionality. It may hamper their vision development. Adults are also advised to stop playing if they begin feeling dizzy.
Lovely.
4. The price is too high
Consoles have shaved their prices sharply over the past couple of years, so the $250 price point is a bit of a shock. How can it cost more than the revolutionary Wii and the evolutionary Xbox 360?
It's also more expensive than the entry-level iPod touch -- and that's where I'm going next.
5. Apple owns Nintendo
"Nintendo 3DS is a category of one," Nintendo stateside chief Reggie Fils-Aime said in a statement last week. "The experience simply doesn't exist anywhere else."
Fils-Aime has had to eat his words before. He put down Apple (Nasdaq: AAPL) last year, feeling that the success of Apple's App Store wasn't making a dent in Nintendo's handheld business.
"It doesn't look like their platform is a viable profit platform for game development because so many of the games are free versus paid downloads," he told video game website Kotaku last April.
If that's the logic going into putting out a $250 machine that requires $40 games, he's going to miss the mark again.
Apple sold nearly 43 million devices running Apple's iOS this past quarter. He may be right in arguing that App Store diversions aren't the full meals offered by Sony and Nintendo for their handheld systems, but the consumers appear perfectly fine to peck their way through Apple's free ad-supported or nearly free games.
The sum is greater than the hole
We can't write off Nintendo entirely. It still has a major advantage over Microsoft and Sony in that its biggest games are proprietary franchises. Sure, that didn't help Sega in its waning hardware days, but Nintendo isn't going away if the 3DS fails to quickly move its initial shipment of 4 million units.
The rub for Nintendo is that the industry is changing. Sales have been sluggish for most of the past two years. All three of the largest publicly traded game developers are trading in the teens and preteens. GameStop (NYSE: GME) shares were rocked this month, after the video game retailer posted disappointing sales.
Nintendo may believe that it's reinventing the portable gaming market, but it's not raising the bar. It's too late to hit the market with a handheld that parents won't buy for their young children and that older kids won't have time for given cheaper and readily available diversions.
What's next, Nintendo?
Will the 3DS be a hit for Nintendo, or is too expensive or too much a novelty to matter? Share your thoughts in the comment box below.
