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Nintendo Stock Booms Thanks to 3D Video Game Console

Handheld 3DS console could revolutionize gaming


Nintendo (NTDOY) stock has steadily grown over the past five years, and it’s not all because of the success of the Wii. The runaway success of the Nintendo DS handheld video game system pleased Nintendo stockholders to no end following its release in late 2004. The Japanese gaming giant’s fortunes only grew upon the 2006 release of the Nintendo DS’ first hardware revision, the Nintendo DS Lite. Various incarnations of the console have sold over 130 million units — making it the best selling video game platform in history.

That total appears to be just the beginning. This week Nintendo shares skyrocketed following the unveiling of their next handheld gaming device, the Nintendo 3DS. As of Wednesday morning, Nintendo stock was up 6% with no signs of slowing down.

Revealed at the video game media event E3 this past Tuesday, the Nintendo 3DS is going to succeed the Nintendo DS as the company’s primary portable gaming device. Like the DS, the 3DS is a clamshell-shaped handheld device featuring two LCD screens. The bottom screen is touch sensitive, while the top screen is a standard LCD. The 3DS’ top screen, unlike the DS, is a widescreen display measuring 3.53 inches, but its consumer appeal lies in its groundbreaking 3D graphical effects rather than improved fidelity.

When activated, the 3DS’ top screen will produce a three-dimensional image with true depth and it does not require users to wear stereoscopic glasses to produce the effect. Along with improved gaming graphics, also features an arrangement of three cameras, two positioned on the surface of the device and one on the inside, that allows users to take 3D pictures of friends and family. The 3DS is also equipped with both an accelerometer and a gyroscopic motion sensor, high tech features that provide motion-based control akin to Apple Inc.’s (AAPL) iPhone 4. (Apple is looking to position the iPhone 4 and the latest generation of iPod Touch devices as direct competitors to Nintendo’s DS, DSi, and now 3DS consoles.)

In layman’s terms, the DS will provide 3D graphics as well as motion sensitive controls. Think of it as a 3D Wii that fits in your pocket.

The announcement of the device has completely overshadowed announcements made by Nintendo’s major competitors at the Electronics Entertainment Expo. Microsoft (MSFT) unveiled a new revision of their Xbox 360 console to coincide with the release of the Kinect device. Microsoft’s Kinect is a motion sensing camera and microphone that allows users to play games and explore multimedia content free of any remote controllers. Meanwhile Sony (SNE) showed off a line of new software tailor made for its device the Playstation Move. Used in conjunction with the Playstation Eye on a Playstation 3, the Playstation Move is a wand-shaped controller meant to give more precision than Nintendo’s Wii motion controller. It remains to be seen whether or not consumers will see these offerings as substantial improvements over Nintendo’s Wii. They will both be released this coming fall.

Excitement over Nintendo’s new machine is warranted given the success of the Nintendo DS. The device has seen four hardware revisions since 2004 and has sold nearly 129 million units as of March 2010. Given the rampant success of Nintendo’s home and portable hardware, the Nintendo 3DS is a guarantee consumer hit. If Nintendo stock continues to climb alongside the E3 buzz, shares stand to go up as much as 10% by the time the markets close on Friday.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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