This is shaping up as the year that true competition comes to the portable gaming industry. Wall Street analysts have already been making predictions as to which manufacturer will take control — Nintendo (PINK:NTDOY) and its glasses-free stereoscopic 3D handheld, the 3DS, or Apple’s (NASDAQ:AAPL) next-generation iPhone, iPad, and iPod Touch — all expected before the year is out.
But it has been difficult to accurately read the market without knowing exactly what Sony’s (NYSE:SNE) would do. Following the PlayStation Conference 2011 in Tokyo, however, the landscape is much clearer, and Sony may have a strategy to fight both Nintendo and Apple.
The Sony NGP, a code name its new handheld (meaning “next generation portable”), is a combination of both hardware design proven successful by Sony’s competitors and compelling new ideas. Like the offerings from Apple and Nintendo, Sony’s NGP features a touchscreen with a resolution comparable to the iPhone 4’s retina display.
What’s new, however, is the touch screen on the back of the device, letting users play touch-based games and access apps without putting undue stress on the actual screen. It also will come with a substantial Flash-based internal memory for downloading content like Apple devices, and it will also support software purchased on Flash cartridges, much like on the Nintendo DS.
Sony also has said it will ship the machine in two models, one WiFi-only and one with 3G, a strategy that has proven successful for both the iPad and Amazon’s (NASDAQ:AMZN) Kindle.
Sony has incorporated features from most every popular consumer handheld and coupled it with new ideas and a graphics processor four times as powerful as that of the iPhone 4. It will also be backed by third-party software support to help guarantee consumer interest –Sony announced sequels in many of its popular franchises, but the most significant software announcement was that Activision Blizzard (NASDAQ:ATVI) is making an exclusive version of Call of Duty for the platform.
However, high-end technology isn’t enough. The iPod Touch and iPhone have been gaining ground because of low-cost casual software. Consumers don’t think of Angry Birds as a video game after all — it’s an “app.”
This is why Sony’s second portable gaming initiative is arguably more significant than the NGP. The company also unveiled the Playstation Suite, an app store available on its own new portable device and Google (NASDAQ:GOOG) Android devices.
This will be the first time Sony is selling its software — original games, non-gaming apps, PSP games, and Playstation 1 games — on third-party platforms. “To sit there and stick your head in the sand and say, ‘smartphones are irrelevant, there are no other gaming mediums,’ I think would be foolish,” said Sony U.S. president Jack Tretton, at the PlayStation conference.
It’s that kind of thinking that will give Sony a significant leg up over Nintendo in 2011. While Nintendo’s 3DS has generated interest from the novelty of its 3-D effects and the legacy of the Nintendo brand, the company is going to be stung by the shift in portable game buying habits. 3DS software is expected to cost between $40 and $50 a game, and full games aren’t available as downloads.
This is a woefully outmoded business model, and should see the company’s profit continue to be damaged by Apple handheld proliferation. Last Thursday, Nintendo said its quarterly profit fell 74%.
Meanwhile, Sony has all of its ducks in a row: a compelling smartphone strategy, a high-end devoted gaming machine, and Call of Duty. Provided the NGP’s price is right, Sony might give Apple a run for its money for the first time since the iPod was released 10 years ago.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
