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Jun 11, 2006

Crave Talk: Is Nintendo the Apple of Apple's Eye?

In 1995 Apple launched its first games console, the Bandai Pippin. It was based on a 66MHz PowerPC processor and ran a stripped-down version of Mac OS 7. The market for the device was not immediately obvious. The Mac was notorious for its lack of mainstream gaming titles, so basing a games console on OS 7 was a staggeringly perverse decision -- some might say suicidal.

The 603e processor the Pippin used was woefully under-specced for decent gaming even back in '95. Set adrift in a world where almost every gamer had a Sony PlayStation, Sega Saturn or Nintendo 64 tucked under their television set, the inevitable happened and Pippin died a horrible, embarrassing death. Recently, the Pippin was included in PC World's '25 Worst Tech Products of All Time'.

Apple's track record with games has improved slightly since. Many major titles like World of Warcraft and Halo are available to buy for the Mac -- although often the Mac version is one release behind the PC versions. Only the bestselling PC games make it to the Mac and there's often a six- to 12-month wait while companies port a title. But this may be about to change.
Just last month, CNET.co.uk's sister site GameSpot reported on a rumour that a secret videogames division is being set up at Apple, headed up by LucasArts' technical director Mike Lampbell. The brief of the department is rumoured to be focused on games for the iPod, but some observers ask why a heavyweight in the industry would be recruited to make iPod games in the vein of the current bat-'n'-ball titles?

Online conspiracy theorists suggest that Apple is about to frag the gaming community with a revelation that could shake Microsoft to its core: Apple will buy Nintendo. What could be more quintessentially left-field Apple behaviour than buying out the US's number three games console manufacturer?

Between howling at the moon, these looneys point to the similar corporate philosophies of Apple and Nintendo (bull-headed determination in the face of defeat); the similar consumer perception of the companies (both have followings whose brand dedication verges on the religiously devout); the similar design styles (the Nintendo DS Lite practically looks like Jonathan Ive built it); and the complementary market spaces (Apple wants games, Nintendo wants style). But somewhere in the looney's mind, is there a scintilla of logic? A tiny fragment of truth spluttering for breath in the soup of madness? Could Apple actually buy Nintendo, and more importantly, why would it want to?

Cisco was rumoured to be looking at a purchase of Nintendo earlier in the year, so the idea of Nintendo being bought is not outlandish in itself. Apple's market cap is $51.7bn (Nintendo's is $23.1bn), so it's got a fair bit of financial clout. If Apple wanted to buy Nintendo it could theoretically raise debt to cover the cost because it has a good credit rating, not to mention $6.34bn in cash reserves. However, a city analyst told Crave that agressive takeovers of Japanese companies can be difficult and expensive. Japanese companies use the keiretsu system of interlocking holdings and partnerships, which makes conventional takeovers exceptionally hard.

If Apple was to acquire Nintendo, a friendly takeover or merger would be more likely. In the merger scenario, Apple might have a chat with Nintendo and convince them to agree to form a new company. Still, the viability of a merger is low. Now may be a bad time to adopt Nintendo -- Apple would do better to wait a year or two to see how the Wii does.

So why would Apple bother with Nintendo anyway? With the massive success of the iPod, Apple has become a hugely popular mainstream vendor and has finally seen the recognition it always felt it deserved. The Motley Fool believes Apple may even be making effective strikes against Dell. However, Apple has not seen similar success with its flagship product, the Macintosh computer.

Apple was the first computer manufacturer to commercialise the windows- and icon-based GUI that is now used by almost every desktop operating system in the world. Yet the market share of Apple's Macintosh is only 2.3 per cent globally and 3.5 per cent in the US. iPods, on the other hand, have an estimated market share of between 60 and 70 per cent. A Nintendo purchase could potentially let Apple bring the success enjoyed by the iPod to the Macintosh computer.

Consider this: the Mac Mini currently retails for not much more than the forthcoming Sony PlayStation 3 will. The Mac Mini can play high-definition video, edit music and photographs, surf the Web, word process and edit video -- things no console can currently do well, if at all. The Mini also runs Apple's extremely robust OS X operating system. What if the Mini could also play Nintendo games? And not just play Nintendo games, but play Nintendo games specifically tailored to the strengths of the Mac Mini's hardware? Would Apple have a viable console on its hands? And if so, could it penetrate the mainstream consumer market with Macintosh computers in a way that has constantly eluded it in the past?

The newsgroups are constantly awash with the dregs of idle wondering, but the Apple and Nintendo partnership is one rumour we can't help hoping is true. The Pippin was the company's biggest disgrace -- how delightful if Apple were to get Mario to redeem its games strategy a full decade on.

-Chris Stevens

SOURCE: www.crave.cnet.co.uk

1 comment:

Sickr said...

Hey nice blog. :)

I believe a merger between the two company could be a very likely scenario. Though as the article states, I believe Apple would bide it's time to see just how well Nintendo's upcoming Wii console goes down with the consumers.

I wrote a short article related to this topic here:

http://sickr.wordpress.com/2006/06/10/apple-and-nintendo/

Mark.