On 27 March, Nintendo Co. launched arguably the most eye-catching handheld gaming device yet, the glasses-free 3DS. That's 3D as in "three-dimensional."
Early reviews and consumer preorders are impressive, which is just what we'd expect from Nintendo. The company has a track record of turning select technologies into well-designed systems, each of which carves out a niche all its own. Last time around, while Sony and Microsoft were trying to outdo each other's high-def video gaming platforms, Nintendo went a different way, with the non¿HD, marketplace-redefining, motion-capturing Wii. Yet the challenges Nintendo faces today would give even the Mario brothers pause.
The first is 3-D itself. In the past 18 months, consumers essentially yawned as the electronics industry plied them with 3-D via televisions, Blu-ray players, and console games. Then there's archrival Sony, already previewing its successor to the PlayStation Portable.
But Sony and Nintendo might as well be best buddies, in an enemy-of-my-enemy-is-my-friend way, as they face the even bigger challenge of smartphones. Over 100 million of them were sold in just the last quarter of 2010. By comparison, the Nintendo DS took four years to reach a mere 91 million units sold. In an April report, IHS iSuppli, a research firm that specializes in consumer electronics, predicts 3DS sales of only 70 million over the same period of time: "Growing competition from the iPod, iPhone, and Android smartphone and tablets will prevent the 3DS from matching the sales of the previous-generation Nintendo handheld, the DS."
Today's smartphone would have been a portable gamer's Valhalla a few years ago: gigahertz-clocking processors with many of the same motion-sensing capabilities as a Wii, plus sparkling high-res displays and—in Apple's case—an App Store filled with over 50 000 games.
To be sure, neither Sony nor the iPhone has the 3DS's glasses-free 3-D. And they don't have Mario or the legendary Zelda. (Both iconic Nintendo franchises should be available for 3DS by the holiday season.) At the same time, 3DS doesn't have phone service, e-mail, AIM, Facebook, Twitter, Foursquare, Skype, Kindle, or Gmail—although both a Web browser and Netflix support are expected later in the year.
Yet perhaps the biggest competitor to 3DS is neither Sony nor the smartphone. "The important question for most people isn't 'Will I buy the 3DS or Sony's new handheld?' " says Kyle Wiens, CEO of tech tear-down website iFixit and an IEEE Consumer Electronics Society board member. "It's 'Will I buy this or the iPod Touch?' "
Wiens said Apple's latest version of the Touch, priced at US $229 for 8 gigabytes, lacks only 3-D as it lures tech heads to do all their gaming as well as music, social networking, Net surfing, and movie and TV too. The 3DS, at $250, has just 2 GB.
The stakes for Nintendo could hardly be higher. If the 3DS fails to score a hit, the company might become the next Sega—a former console maker relegated by the marketplace to serve as a software-only supplier.
But fortunately for Nintendo, the 3DS's biggest challenger is all but asleep at the switch, says games industry analyst Billy Pidgeon of M2 Research, based in Encinitas, Calif.
"Apple doesn't get games at all," Pidgeon says. "Everyone knows Steve Jobs doesn't like games. He thinks it makes the computer more of a toy. To the extent that they have games [in the App Store], they don't really curate it. They treat it like a commodity, just like they treat music."
For Nintendo, the handheld gaming device is anything but a commodity. And it shows the moment you pick it up.