Nintendo will have to have a string of spectacular failures before it starts share cropping. Remember n64? Remember GameCube? Both were pretty lackluster compared to Super NES. VirtualBoy? Disaster.
The Wii U and 3DS might be disappointing, but Nintendo is a survivor. It has the internal support to last through dry spells on the strength of first party titles alone.
It would be very difficult for a company as resilient and conservative as Nintendo to sink itself in such a short time frame. Remember, too, this company also started off making playing cards 100 years ago.
The only bad end I could see in Nintendo's immediate future would be an aggressive if not hostile takeover. I believe its market cap is only $20 billion, and supposedly half of that is in cash. If Apple or Microsoft wanted to pay a premium for the ultimate maker of killer apps this is the time to make a move. In another cycle it will be too late: the mobile wars will be decided and/or Nintendo will likely have recovered. Who knows how well the company would survive a takeover though.
I think the Wii, in retrospect, is the writing on the wall for Nintendo's hardware. They couldn't keep up on graphics or CPU, so they went sideways into new controller technologies. The problem with that, as demonstrated by Kinect, is that it's easier to add a new controller technology to an existing console than it is to improve the horsepower of a weak console with a novel controller scheme.
I disagree pretty strongly. All of the major game consoles are an IBM PowerPC CPU with nVidia/ATI graphics. Everything is off the shelf. The Xbox 360, GameCube, Wii, and Playstation 3 are pretty much all based on those same designs (although the PS3's CPU has crazy after-market modifications which really didn't work out so well).
The same can be said about phones and portable video game systems. It's all ARM CPUs with Imagine GPUs. Android, iOS, Windows Phone 7, Blackberry, webOS, Nintendo GBA/DS/3DS, Sony Vita all use the exact same chips from the same design firms.
The big hardware differentiator is what cost/performance balance you want to strike. Newer architectures with newer manufacturing processes cost more plain and simple. And there is a spectrum of other off the shelf components to round out the package.
There can be some play in getting more out of a design with engineering tricks or getting better components at the same cost with economies of scale. Or you can corner the market by buying out the entire manufacturing capacity of the best components to deny your competitors (or vice versa). But it's pretty much you get what you pay for.
Nintendo builds hardware two to three generations behind to save a lot on costs. Not because it doesn't know how to get something faster and better. The upcoming Wii U is basically an older PowerPC CPU with an older ATI GPU. If Nintendo wanted, it could create a crazy powerful console with a $1000 CPU and dual $600 GPUs that nobody would buy. All it needed to do was tell IBM and ATI what it wanted. It wasn't a matter of engineering that steered them away, but a matter of economics. Which if you remember right worked great in the short term for the Wii. But as everyone already knew wasn't a long term play. Hence the earlier-than-everyone-else release of the Wii U.
It also ignores what Nintendo is. Nintendo is vertically integrated. It makes game machines, games, and game characters (i.e. Mario). It doesn't make money by making a better FPS machine. It makes money by making a cheap machine with some wacky creative edge (i.e. a new type of controller). Then its game division creates the best games, with their internal know-how. Then they leverage the Mario brand, and sell they can sell the whole package (along with the sequels they crank out) with a massive margin.
If it flops, who cares? They didn't spend huge amounts on loss-leading hardware, and they didn't need to make a huge investment in a cutting edge FPS only to be told it's not as good as Halo.
Apple (along with the Angry Birds developers) stole their lunch, with another cheap game machine, with an even cooler new control system. Eventually, that market will start to mature, and you will need 100 developers to make a good iOS game. And Nintendo won't want to touch that market with a barge pole, because it becomes a winner-takes-all bloodbath with huge entry costs.
The question is, is iOS an existential threat to the gaming market as a whole? If so, Nintendo will lose. If not, Nintendo will come up with some other wacky control system, and build a few fun (but simple) games staring Mario. People will buy it, because they want a bit of a change from their familiar, mature, and eventually boring touch games. Apple won't hurt them this cycle, because they are busy consolidating their monopoly on tables. Apple doesn't want to take over the gaming market - the 3DS was just a piece of collateral damage. Apple wants to sell a boring mature platform (with simple updates to performance, but no fundamental changes), not novelties that will need to be redesigned every 5 years. But the iPad just happens to be new enough to still be a novelty, and thus devastate Nintendo.
> They couldn't keep up on graphics or CPU, so they went sideways into new controller technologies.
It's not about ability, it's a cogent choice to step back and not play into the arms race. They did the exact same thing with the DS, and outsold the (very significantly) more powerful PSP almost 3:1. And a few years earlier, the GameBoy brutalized the Game Gear.
In terms of raw power, the GC was the most powerful console of its generation (or tied with the Xbox). So was the N64. Neither panned out (though neither lost N money either), so Nintendo went into a different direction. And — at least for a time — struck gold.
I'm not saying Nintendo is going out of business, I'm saying gaming consoles are about to become the 201x's version of the mp3 player: a huge product category that gets eaten by converged devices.
You could argue that Nintendo will sell that converged home device but Wii U sure ain't it. No it will probably be the big app platforms (Windows, iOS/OS X, Android/linux) that win the home.
Nintendo harbors great will with consumers like Apple. WebOS seems to be a great mobile operating system.
To witness some true, fierce competition, Nintendo should mix their branding/games into WebOS & then allow developers to create games for their platform. WebOS already has 1,000s of apps created for it now.
Everyone currently in the market (RIM & Windows) are stale brands and do not harbor excitement amongst many demographics. Nintendo's brand loyalty stretches many demographics. From 16 to 24, 24 to 35 to 35 to 50.
How many iOS and Android users have searched for a mario game for their devices? HOw many people own Wii just so they can play these games?
The Wii U and 3DS might be disappointing, but Nintendo is a survivor. It has the internal support to last through dry spells on the strength of first party titles alone.
It would be very difficult for a company as resilient and conservative as Nintendo to sink itself in such a short time frame. Remember, too, this company also started off making playing cards 100 years ago.
The only bad end I could see in Nintendo's immediate future would be an aggressive if not hostile takeover. I believe its market cap is only $20 billion, and supposedly half of that is in cash. If Apple or Microsoft wanted to pay a premium for the ultimate maker of killer apps this is the time to make a move. In another cycle it will be too late: the mobile wars will be decided and/or Nintendo will likely have recovered. Who knows how well the company would survive a takeover though.