MediaTek has shown off one of its most interesting SoC designs to date at the China Electronic Information Expo. The MT6595 was announced a while ago, but this is apparently the first time MediaTek showcased it in action.
It is a big.LITTLE octa-core with integrated LTE support. It has four Cortex A17 cores backed by four Cortex A7 cores and it can hit 2.2GHz. The GPU of choice is the PowerVR G6200. It supports 2K4K video playback and recording, as well as H.265. It can deal with a 20-megapixel camera, too.
The really interesting bit is the modem. It can handle TD-LTE/FDD-LTE/WCDMA/TD-SCDMA/GSM networks, hence the company claims it is the first octa-core with on board LTE. Qualcomm has already announced an LTE-enabled octa-core, but it won’t be ready anytime soon. The MT6595 will – it is expected to show up in actual devices very soon.
Of course, MediaTek is going after a different market. Qualcomm is building the meanest possible chip with four 64-bit Cortex A57 cores and four A53 cores, while MediaTek is keeping the MT6595 somewhat simpler, with smaller 32-bit cores.
In response to an all-time low in user growth figures during the recent quarter, Twitter Chief Executive Dick Costolo informed worried Wall Street analysts that the company would make a number of changes to freshen up the service.
The redesign, while mostly cosmetic, hinted at what Costolo described in February as a willingness to experiment with new ways to organize content. Users can now “pin” a tweet to stay at the top of their feed, a rare instance of Twitter departing from the continuously rolling format that has defined the service.
Tweets that have received more re-tweets or replies will also appear slightly larger to spur more user engagement.
The new layout, which will be available to a small group of users initially, will be widely deployed to Twitter’s 241 million users in the coming weeks, the company said.
Twitter reported higher-than-expected fourth-quarter revenue on February 6, but investors focused on user growth of just 3.8 percent, the lowest rate of quarter-on-quarter growth since Twitter began disclosing user figures. The San Francisco-based company went public in November.
In recent weeks, Twitter has also reportedly been testing a number of new advertising units, such as ads that include download links for mobile apps.
As part of Tuesday’s refresh, Twitter said users will also be allowed to select a large banner picture to display across the top of their profile page, as well as a much larger profile picture, two features that resemble another social network familiar to most of the world’s Internet users: Facebook.
The HTC One spent its year at the top of the product line receiving rave reviews but was undermined by advertising widely criticized as confusing, sending the company’s market share into freefall.
HTC was once a firm third to Apple Inc and Samsung Electronics Co Ltd, selling 10 percent of smartphones globally two years ago, but it ended 2013 with a market share of just 2 percent, showed data from researcher Strategy Analytics.
The company started 2014 by booking a net loss of T$1.88 billion ($62.06 million) for January-March. That compared with a mean loss of T$1.59 billion estimated by 18 analysts polled by Reuters, and profit of T$85 million logged a year earlier.
Revenue fell 22.6 percent to T$33.12 billion, the company said in a statement on Monday.
HTC, however, broke 28 months of on-year revenue declines with a rise of 2.16 percent in March, and said it expected to return to profit in the second quarter thanks in part to the late-March release of its upgraded flagship, the HTC One M8.
Shares of HTC have fallen 38 percent over the past year, compared with a 12 percent rise in the Taiwan Stock Exchange Weighted Index. Ahead of the release, they closed up 3.6 percent versus the benchmark’s 0.1 percent loss.
The former contract manufacturer released a series of mid-range smartphones in recent weeks, predicting cheaper phones in emerging markets will help it return to profit this year.
It has also launched a partnership with search engine giant Google Inc to manufacture smart watches.
But it is the new flagship HTC One M8 that the company hopes will help it reestablish itself as a challenger to market leaders Apple and Samsung.
“The M8 is good, but it’s not as revolutionary as the previous flagship,” said Yuanta Securities analyst Dennis Chan. “Everyone is watching the second quarter to see how it sells.”
Tech website CNET.com awarded the phone four and a half stars out of five, calling it “a stunning sequel” to last year’s HTC One – a phone whose equally strong reviews were not matched by marketing and so did not translate into strong sales.
The new flagship could be in for a similarly rough sales ride as smartphone growth globally is likely to slow this year to 19 percent from 39 percent in 2013, and taper off over the next few years, showed data from researcher IDC.
As smartphones mature and technological upgrades become more incremental, analysts say even more importance will be placed on marketing and brand image – an area Chairwoman Cher Wang admitted HTC “didn’t do well” last year.
To distinguish itself to trend-conscious consumers, HTC must learn from Apple, whose innovative brand image and marketing strategy has won plaudits, said Taipei-based brand consultant Mark Stocker.
“Mimic them, but figure out what your brand stands for,” said Stocker. “If Apple is Mercedes Benz, try to make yourself BMW.”
Juniper Networks plans to reduce its global workforce by six percent and focus on its high-growth businesses. Juniper said most of the cuts would impact middle management positions and that it expected to incur cash charges of about $35 million in the first quarter, related to severance and other expenses. The company had 9,483 full-time employees as of December 31.
Juniper also said it would stop development of the application delivery controller technology, which helps remove excess load from servers, resulting in a non-cash intangible asset impairment charge of about $85 million. The company said it plans to consolidate its facilities, flog off of about 300,000 square feet of leased facilities.
Juniper added that it expected to record other non-cash asset write-downs of about $10 million in the first quarter and that it expects to carry out more restructuring in the second quarter.
Hedge fund Elliott recently claimed that Juniper shares were “undervalued” and could be worth $35-$40 if Juniper focused on revamping its core business of making routers and switches for mobile carriers such as Verizon and AT&T. Shares of Juniper are currently worth at $26.35.
Web hosting company The GoDaddy Group Inc is gearing up for a second attempt at an initial public offering, according to two people familiar with the matter, as the 2014 tech IPO pipeline continues to grow.
GoDaddy, the Internet domain registrar and web host known for its racy ads, would join a number of high-profile tech names expected to go public this year in the wake of Twitter Inc’s successful debut. They include “Candy Crush” developer King Digital and cloud services providers Box and Dropbox.
The company is in the process of selecting underwriters for its IPO, one of the two sources said on condition of anonymity.
GoDaddy was not immediately available for comment.
GoDaddy had filed to go public in 2006 but was told at the time that it would be required to take a 50 percent haircut — a percentage that is subtracted from the par value of assets that are being used as collateral — on its initial public offering.
The company instead decided to pull its filing, citing unfavorable market conditions.
The company, founded in 1997, was eventually acquired by a private equity consortium led by KKR & Co and Silver Lake in 2011 for $2.25 billion. Silver Lake declined to comment while KKR did not immediately respond to a request for comment.
Other private equity buyers included Technology Crossover Ventures.
GoDaddy, which provides website domain names, is famous for airing bawdy commercials with scantily clad women for the past decade during the Super Bowl.
The Wall Street Journal first reported on the plans.
China’s e-commerce giant Alibaba Group Holding has agreed to acquire controlling interest in ChinaVision Media Group Ltd for $804 million, giving it access to TV and movie content as competition in the world’s biggest Internet market becomes increasingly cutthroat.
The pact, which sent ChinaVision’s stock surging, comes amid a flurry of deals as Alibaba, social media giant Tencent Holdings Ltd and search engine Baidu Inc seek to expand into each other’s turf.
This week Tencent said it was taking a stake in China’s No. 2 online retailer JD.com, with the new partnership gunning for Alibaba’s Achilles heel – its weakness in mobile.
Alibaba’s acquisition of TV and movie content is aimed at retaining current users and attracting more, and comes on the heels of its launch of its Ali TV operating system last July as well as the launch of a mobile gaming platform this year.
ChinaVision and Alibaba said they will establish a strategic committee to explore future opportunities in online entertainment and media-related areas.
Alibaba will, through a subsidiary, buy 60 percent of ChinaVision’s enlarged share capital at HK$0.50 apiece, a discount of about 21 percent to its previous stock close.
ChinaVision stock jumped by more than three times in value to around HK$2.27 in early trade. The stock was suspended on February 25 ahead pending an announcement.
Tencent, which had an 8 percent stake in ChinaVision, will see its stake diluted to 3 percent after the Alibaba deal.
The agreement also comes as Alibaba prepares to launch an IPO. The company has been valued at around $140 billion, according to an average of 12 analysts’ estimates.
In the deal with ChinaVision, Goldman Sachs advised Alibaba, while Reorient Financial Markets Ltd was the financial adviser for ChinaVision.
The little known firm said the proposal for Barnes & Noble as a whole would be for $22 per share, which would value the top U.S. bookstore chain at $1.32 billion. It comes after earlier proposal in November for $20 per share, its second.
G Asset, which not did detail how it would finance a deal, also made an alternative offer to buy Nook for $5 per share, saying spinning off the digital books and device business would create “substantial shareholder value.”
The latest offer for the whole company would value Barnes & Noble at $1.32 billion, while the proposal for Nook would value that unit at about $300 million.
The firm has previously pressed the company to spin off its Nook unit from Barnes & Noble’s bookstore and college units.
Michael Glickstein, G Asset’s Chief Investment Officer, and the only person listed on the firm’s website, did not immediately return a request for comment.
Barnes & Noble shares were up 5.8 percent at $17.75 in afternoon trading after going as high as $19.12 after the news was released, suggesting Wall Street analysts were doubtful a deal would get done.
A Barnes & Noble spokeswoman declined to comment beyond confirming that the company had received G Asset’s offer.
The original Nook device was launched in 2009 to help Barnes & Noble fend off Amazon.com Inc and allowed the retailer to win as much as 27 percent of the U.S. e-books market.
But the company lost hundreds of millions of dollars trying to keep pace with deep-pocketed rivals such as Amazon, Apple Inc and Google Inc. It has scaled back its Nook business and focusing more on content and software.
Two years ago, Microsoft Corp invested $300 million in the Nook unit for a 17.6 percent stake, valuing the division at $1.7 billion. In late 2012, Pearson PLC took a 5 percent stake in Nook for $89.5 million.
Facebook Inc’s awe-inspiring $19 billion bid for fast-growing mobile-messaging startup WhatsApp sent shares of BlackBerry Ltd surging after the closing bell as early as Wednesday, as investors were cheered by the lofty valuation for the messaging platform.
The deal sent shares in BlackBerry up as much as 9 percent in trading after the bell because it put a rough valuation metric around the smartphone maker’s own BlackBerry Messaging service.
BlackBerry Messaging, or BBM as it is more commonly known, was a pioneering mobile-messaging service, but its user base has failed to keep pace with that of WhatsApp, in part because BlackBerry had long refused to open the service to users on other platforms.
WhatsApp, with a user base of some 450 million, has grown rapidly. Its service works on Apple Inc’s iOS platform, Google Inc’s market-dominating Android operating system, along with devices powered by both the Windows and BlackBerry operating systems.
BBM remains popular, even though BlackBerry devices have waned in popularity. Late last year, the Waterloo, Ontario-based smartphone maker finally opened the messaging platform to users of iPhones and Android devices, and the service currently has over 80 million active users.
However, investors have attributed little value to the asset within the company. On Tuesday, Raymond James analyst Steven Li, in a note to clients, broke out a sum-of-parts valuation of the company and pegged the value of BBM at merely $240 million, or $3 per user.
Facebook’s valuation of WhatsApp translates into roughly $42 per user, and that could lead investors and analysts to rethink their valuation of the asset within BlackBerry.
BlackBerry has given no indication it is keen to sell the asset. While there has been some speculation that BlackBerry may seek to carve out the unit, or even sell it, the company’s new Chief Executive John Chen has so far said that BBM remains a core asset for the company.
HTC Corp said new lines of mid-tier handsets will help it return to profitability in 2014, predicting cheaper products may aid them in reclaiming market share and put an end to over two years of sliding sales.
HTC’s optimism comes despite 27 consecutive months of falling year-on-year revenue amid stiff competition from heavyweights like Apple Inc and Samsung Electronics Co. On Monday HTC said January sales slid 38 percent from a year earlier to T$9.67 billion ($319.23 million).
Chief Financial Officer Chialin Chang told an analyst and investor briefing on Monday that 2014 should see a rise in gross profit margins due to an improved product mix. “What we’re shipping in there, we want to make sure is competitive,” Chang said.
HTC’s decline has been swift, squeezed by cheaper rivals in China as well as Apple and Samsung. Just over two years ago it supplied one in every 10 smartphones sold around the world: in 2013 its global market share had fallen to just 2 percent, according to Strategy Analytics analyst Neil Mawston.
That decline has left its mark on investors. HTC’s share price has shown no signs of recovering from a three-year slide in value to one-tenth of its record high.
HTC has acknowledged the need for action. “The problem with us last year was we only concentrated on our flagship. We missed a huge chunk of the mid-tier market,” said co-founder and Chairwoman Cher Wang, speaking to Reuters in an interview in New York last week alongside Chang.
Amid the decline in its fortunes, HTC’s brand image has suffered, and investors have been desperate for signs of a clear strategy – though the announced push into mid-tier smartphones may offer a glimmer of hope for the company.
The CFO said on Monday that new mid-tier and low-end handsets should provide the majority of revenue, bar sales from its flagship HTC One phone, after the first quarter. For January to March, it expects revenue to fall to T$34 billion to T$36 billion from T$42.8 billion a year earlier.
The company in January reported its second consecutive quarter of operating losses, with a slim net profit of T$300 million ($10 million) for the fourth quarter helped by an asset sale.
Chang was optimistic about prospects for its flagship, feature-loaded HTC One smartphone, which won rave reviews last year that have yet to translate into matching sales.
During the investor call, Chang also hinted at a venture into wearable technology. He declined to give details as to the type of product, or when it may be announced.
Walt Disney Co is making plans to lay off several hundred people in its interactive unit, the division that includes gaming products and the Disney.com website, The Wall Street Journal reported earlier this week.
The job eliminations are expected to begin after Disney releases its quarterly earnings today, the Journal said. Playdom, a social gaming business Disney acquired in 2010, is one division expected to see cutbacks, the newspaper said.
Disney is trying to turn around the interactive unit, which has about 3,000 employees. Its new Infinity video game enjoyed strong initial sales after its release last August, helping the division report a $16 million profit for the quarter that ended in September, an improvement from the $76 million loss a year earlier.
A Disney spokeswoman had no comment.
Nintendo has issued a detailed and far-reaching response to the pervasive concerns about its future as a business.
In a meeting with investors, Nintendo president Satoru Iwata outlined the company’s strategy in both the short-term and as far ahead as 2016. From changing the fortunes of the Wii U to evolving the way we think about game consoles as a concept, Nintendo displayed striking candour in its attempt to allay the criticisms it has received since it drastically reduced its sales forecasts earlier this month.
However, Iwata was clear about one thing from the outset: regardless of what followed, there are certain aspects of Nintendo’s business that will not change, namely the frequently proposed idea that it should take its IP stable to new platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business,” he said. “Naturally, we are moving ahead with research and development efforts for future hardware as we have done before, and we are not planning to give up our own hardware systems and shift our axis toward other platforms.
“Dedicated video game platforms which integrate hardware and software will remain our core business… We are not planning to give up our own hardware systems and shift our axis toward other platforms”
“From a medium- to long-term standpoint…we don’t believe that following trends will lead to a positive outcome for Nintendo as an entertainment company. Instead, we should continue to make our best efforts to seek a blue ocean with no rivals and create a new market with innovative offerings.”
Here are the key points from Iwata’s presentation
The Wii U is Nintendo’s top priority
It is no secret that Nintendo has struggled to repeat the success of the Wii with the Wii U, but Iwata reassured investors that it has no intention of abandoning its ailing console. The possibility of a further reduction in price was ruled out immediately, with Iwata instead emphasising the company’s ongoing failure to adequately demonstrate the value of the GamePad controller, and to distinguish the console from its hugely popular predecessor.
“By looking at the current sales situation, I am aware that this is due to our lack of effort,” he said. “Our top priority task this year is to offer software titles that are made possible because of the GamePad… We have managed to offer several of such software titles for occasions when many people gather in one place to play, but we have not been able to offer a decisive software title that enriches the user’s gameplay experience when playing alone with the GamePad. This will be one of the top priorities of Mr. Miyamoto’s software development department this year.”
Iwata offered a strong first-step by setting an official May release date for the release of Mario Kart 8, but he also indicated that Nintendo’s development teams would focus on the GamePad’s near-field communication (NFC) function – the same basic technology as that used in lucrative franchises like Skylanders and Disney Infinity. Iwata promised more details of its plans for NFC at E3 in June.
The end of “device-based relationships”
While many have cited the Wii U as evidence of Nintendo’s failure to respond to the changes in the games industry since the launch of the Wii, Iwata stated that the company has already laid the foundations for a fundamental shift in the way it thinks about its products.
Before now, Nintendo had “device-based relationships” with its customers. This was mitigated somewhat by the strength of its software IP, but fundamentally the link with any given consumer followed the lifecycle of each piece of hardware. “We became disconnected with our consumers with the launch of each new device as we could only form device-based relationships,” he said.
However, the Wii U saw the introduction of “Nintendo Network IDs,” an attempt to create “account-based” customer relationships that could continue across different hardware platforms and generations. In the future, Iwata said, “connecting with our consumers through NNIDs will precisely be our new definition of a Nintendo platform.”
With this in mind, Iwata was able to put an end to the speculation around Nintendo’s strategy for smartphones and tablets. He made it quite clear that Nintendo has no plans to release its games on smart devices, but it does intend to use them as a way to communicate and build relationships with new audiences. Iwata offered few details of how the company intends to accomplish that goal, but he indicated that it would include a mobile app that leveraged Nintendo’s existing IP to raise awareness of its hardware and software.
“I have not given any restrictions to the development team, even not ruling out the possibility of making games or using our game characters. However, if you report that we will release Mario on smart devices, it would be a completely misleading statement. It is our intention to release some application on smart devices this year that is capable of attracting consumer attention and communicating the value of our entertainment offerings.”
Flexible pricing for existing and emerging markets
The existence of NNIDs and account-based relationships will also give Nintendo the ability to alter the way its products are sold. Iwata highlighted the company’s role in establishing the model of selling a console for several hundred dollars and individual games for fifty or sixty dollars, but Nintendo now recognises that this model is no longer viable in the long-term.
The first aspect of this that Nintendo intends to challenge is the fixed price-point of software. Iwata suggested a system where the price of a games could be tailored to individual customers based on their NNIDs: someone who purchased five games in a year might pay less and less for each one, for example, or there might be incentives tied to recommending a game to a friend.
“If we can achieve such a sales mechanism, we can expect to increase the number of players per title, and the players will play our games with more friends. This can help maintain the high usage ratio of a platform… Nintendo aims to work on this brand-new sales mechanism in the medium term, but we would like to start experimenting with Wii U at an early stage.”
“While we will continue to devote our energy to dedicated video game platforms, our first step into a new business area is the theme of ‘Health’”
This flexibility will also extend to emerging markets for gaming across the world. Nintendo is a globally recognised brand, but Iwata conceded that the price of its products has put them beyond the reach of people in certain countries. While Iwata didn’t mention any specific regions, he is likely referring to countries like Brazil and India, where the interest in gaming has increased in concert with the disposable income available to the population.
“To leverage Nintendo’s strength as an integrated hardware-software business, we will not rule out the idea of offering our own hardware for new markets. But for dramatic expansion of the consumer base there, we require a product family of hardware and software with an entirely different price structure from that of the developed markets.
“We aim to connect with consumers who do not own Nintendo’s video game systems yet, which will play an important role in cultivating new markets. Once we can establish such a connection with consumers in these nations, we will be able to use smart devices to share our information as well as important content distribution infrastructure. We plan to take significant steps toward such a new market approach in the year 2015.
Going beyond games
There may be no chance of playing Super Mario World on an iPad anytime soon, Iwata did state Nintendo’s interest in making money from its IP outside of first-party video games. Nintendo has always been very cautious of damaging its iconic characters through excessive merchandising and licensing, but one need only look at Rovio’s Angry Birds to see how much profitable such deals can be. Indeed, Iwata attributed the strength of Nintendo’s IP stable to that very reluctance, but, he said, “we are going to change our policy going forward.”
“To be more precise, we will actively expand our character licensing business, including proactively finding appropriate partners. In fact, we have been actively selling character merchandise for about a year in the U.S. Also, we will be flexible about forming licensing relationships in areas we did not license in the past, such as digital fields, provided we are not in direct competition and we can form win-win relationships.
“By moving forward with such activities globally, we aim to increase consumer exposure to Nintendo characters by making them appear in places other than on video game platforms.”
Nintendo’s new business idea: Health
Iwata closed the presentation with Nintendo’s planned entry into an entirely new area of business, one that will provide the “blue ocean” the company so desperately needs.
“While we will continue to devote our energy to dedicated video game platforms, what I see as our first step into a new business area in our endeavour to improve [quality of life] is the theme of “Health.” Of course, defining a new entertainment business that seeks to improve [quality of life] creates various possibilities for the future such as “learning” and “lifestyle,” but it is our intention to take “health” as our first step.”
Again, exact details of what this focus on health will entail were not provided, but Iwata described the concept as “an integrated hardware-software platform business” that will use the company’s experience making products like Wii Fit, Brain Age and the Touch Generations series as a springboard for a more pervasive and persistent initiative.
“We will be able to provide feedback to our consumers on a continual basis, and our approach will be to redefine the notion of health-consciousness, and eventually increase the fit population… I feel that not only can this [quality of life]-improving platform utilise our know-how and experience about video game platforms, but also we can expect it to interact with games and create a synergistic effect.
“While we feel that this is going to take two to three years after its launch, we expect the [quality of life]-improving platform to provide us with new themes which we can then turn into games that operate on our future video game platforms, too. Once we have established such a cycle, we will see continuous positive interactions between the two platforms that enable us to make unique propositions.”
Iwata promised to announce more details this year, and confirmed that the new business will officially launch during the fiscal year ending March 2016.
Shares of the company, the maker of Norton anti-virus software, fell 3 percent after the bell.
“We are pleased with the quarter, but we’re not happy until we’re back into positive revenue growth,” Chief Executive Steve Bennett told Reuters on Wednesday.
Worldwide PC shipments were expected to fall about 10 percent in 2013 and by another 4 percent in 2014, research firm IDC said in December.
Symantec’s revenue fell to $1.71 billion in the third quarter from $1.79 billion a year earlier.
Bennett said the fall in revenue was also due to changes in the company’s organization.
Symantec has been reorganizing its sales force to create specialists for each product group instead of having everyone sell everything, leading to a temporary shortfall in revenue.
“They are trying to stimulate demand and drive better licenses from a new and improved sales force,” FBR Capital Markets analyst Dan Ives said in an email.
Symantec’s security products usually come bundled with PCs as the company has distribution partnerships with manufacturers.
The company’s consumer business sells products and services to individuals and home businesses globally through an e-commerce platform, internet-based resellers and retailers. Symantec also has partnerships with manufacturers to distribute internet security suites and online backup offerings.
Symantec reported a 4 percent decline in revenue from its protection business, which represented 42 percent of total revenue, and a 6 percent fall in revenue from its information management unit, which accounted for 39 percent of overall revenue.
Sales in the company’s information security business fell 3 percent.
Net income rose to $283 million, or 40 cents per share, in the third quarter, from $216 million, or 31 cents per share a year earlier.
Excluding items, the company earned 51 cents per share. Analysts, on average, had expected adjusted earnings of 43 cents per share on revenue of $1.65 billion, according to Thomson Reuters I/B/E/S.
Symantec’s fourth-quarter forecast was in line with Wall Street expectations.
Nintendo blew it. That much is clear, and even Satoru Iwata doesn’t debate it – Nintendo blew it. The financials could be much worse, but the unit sales? Way, way below targets, and in the case of Wii U, way below sustainability. Nintendo blew it! Shout it from the rooftops, if you can find space on a rooftop next to all the people who are already shouting it, with altogether too much peculiar jubilance in their snide, told-you-so voices.
Nintendo blew it. Blew what, though? That’s a tougher question. The company’s year has been a lot more complex than anyone is giving it credit for. In 2013, Nintendo was proud owner of the best-selling console in every major territory worldwide, and launched an enviable range of first-party software titles that sold over a million copies each – more than any other publisher out there. The company retained its crown as the biggest platform holder and the biggest software publisher in the business.
Yet, Nintendo blew it, because it also had a platform that utterly under-performed even the most conservative of estimates – a console that, on its current trajectory, is set to undershoot the low bar set by the GameCube and become the firm’s worst performing home console ever. Moreover, Nintendo blew it in a subtle but crucially important way – with startling incompetence for a company of its size, the firm predicted sales figures for both the 3DS and the Wii U which were absolutely ludicrous and then failed to revise them as the year carried on, meaning that even the solidly performing 3DS has undershot its targets, while the Wii U looks even worse than it ought to (which is pretty bad to begin with).
“Nintendo’s stock didn’t tumble too badly after it revised its guidance, largely since nobody with a clue actually thought the firm was going to hit its targets anyway”
This latter aspect has made the coverage of Nintendo’s situation even more negative than it would already have been (and there are plenty of people waiting to pile onto the company at the slightest provocation), since it covers up the success of the 3DS and its software line-up – seriously, 3DS has had an amazing year for software and is now set up with a library that effectively secures the console’s future – in a heavy smearing of corporate incompetence. It has also, understandably, deeply annoyed shareholders, because they rely on companies making accurate predictions to figure out whether or not to pick up stock in a firm. That said, Nintendo’s stock didn’t tumble too badly after it revised its guidance, largely since nobody with a clue actually thought the firm was going to hit its targets anyway. Incidentally, the company’s stock price is about 50% higher today than it was 12 months ago, in line with the rise in the Nikkei 225 index – which means that Japanese investors, at least, are rating the company as broadly neutral rather than actually negative.
Still, Nintendo blew it, and that means lots of people are making angry noises. Iwata must go, say some; Nintendo must exit hardware, say others; time for Mario on smartphones, say still others. The owners of all of those voices are going to be disappointed – not least, I believe, because very few of them actually understand Nintendo as a company or the Japanese corporate environment in which it operates. They don’t understand that activist shareholders don’t mean a tuppenny damn to a company whose shares are largely held by a combination of the founding family, the senior staff and (more significantly still) the complex web of interrelated share- and debt-holdings that connects Nintendo with Japanese banks and other corporations, none of whom have the slightest concern in being “activist” except in the most extreme of circumstances. An earnings miss? Pah! Japanese corporations routinely missed annual earnings every year for decades after the Asian Financial Crisis of the early 1990s, but shareholder pressure to change top management never materialised then, and it won’t materialise now. Iwata is secure until he does something sufficiently wrong to have a taint of scandal around it, and that’s deeply unlikely to happen.
Exiting hardware? Absolutely no chance. Nintendo’s primary view of itself is as a toy company and its core business model is selling hardware (generally profitably) and then selling software that runs on that hardware (extremely profitably). The synergy between the company’s hardware side and its software side is legendary, as is the extent to which each Nintendo platform is designed with the requirements of planned first-party software in mind. For that reason alone, it’s likely that the Wii U will eventually have a clutch of startlingly excellent games, matching last year’s critically acclaimed Super Mario 3D World in quality – although whether that will actually do anything to resuscitate sales is another question entirely. The point is that this approach isn’t going to change; the inertia behind Nintendo as a hardware company is immense, and moreover, despite this year’s earnings miss, it’s largely working. Nintendo is, pretty much every year, the largest and most successful game software company in the world. Would it retain that crown on someone else’s hardware? If you rush to answer “yes!” to that question, either your crystal ball gazing skills are excellent or you haven’t thought about it hard enough; I don’t think there is a good answer to that question right now, and I know Nintendo will be eyeing Sega’s post-hardware decline and thinking about its own potential fortunes as one-among-many on a smartphone app store. Right now, Nintendo has around 40 million 3DS owners who are keenly anticipating future first-party releases from the company – keenly enough that they start to agitate and make noise if there’s ever a gap in the release schedule. Would that be true on iOS, or Android, or even on a competitor’s console platform?
“one of the company’s failings, in some regards, is that it still doesn’t really have a global outlook, with Nintendo of America and Nintendo Europe being rather stunted”
How about a limited engagement with smartphones, then, even if they wouldn’t make the leap entirely? That’s plausible. Nintendo’s primary point of reference for its product decisions is Japan – one of the company’s failings, in some regards, is that it still doesn’t really have a global outlook, with Nintendo of America and (even more so) Nintendo Europe being rather stunted local offshoots whose actual contribution to the firm’s planning and success is pretty obviously minimal. In Japan, smartphone games are a huge sector, and interestingly, there’s seemingly more of a market for premium-priced games than there is in the west, where free-to-play is increasingly the only show in town (although premium-priced games are carving out an interesting niche there too). There is, I believe, some potential for Nintendo to start putting Virtual Console titles on smartphones, perhaps initially through a tie-up with one of Japan’s carriers. However, I’d expect this roll-out to be slow and careful, with Nintendo incredibly mindful of the possibility of damaging its core brands by launching Mario or Zelda games tainted by emulation problems or crap touchscreen controls. Still – it could happen, and is by far the most likely of the “demands” being made of the firm to actually be met in some limited form.
If Iwata isn’t going to go (he’s not), Nintendo isn’t going to exit hardware (they’re not) and the company’s future isn’t on smartphones (it’s not, although some cautious toes in that water may be seen in time), then what is Nintendo’s reaction to its present situation going to be?
I’ve stated this before, but it bears repeating – Nintendo has incredibly, insanely deep pockets. The firm has set aside a vast war chest over the course of its successful years, and it can easily ride out even the complete failure of a console platform, supporting that platform sufficiently to satisfy consumers while quietly working on a replacement. That’s what Satoru Iwata told me Nintendo would do if the Wii failed completely – they’d make something else and try that instead – and I see no reason why that logic would have changed. If anything, the firm’s financial position is even stronger now than it was then.
What will Nintendo make? There’s a lot of speculation around that, but most of it is evolutionary. A faster, more powerful DS / 3DS style handheld. A Nintendo tablet, capable of handheld gaming and being hooked up to a TV. A full-spec next-gen console built to rival the PS4. All of these are options for the company – the tablet computer one is even an interesting one, combining as it does the handheld market (which Nintendo always dominates) with the home console market (where it’s hit and miss). However, they all miss the crucial ingredient which Nintendo actually requires to bring itself back to success – surprise.
“Nintendo needs the element of surprise. It surprised the hell out of everyone with the DS, it surprised everyone with the Wii”
Nintendo needs the element of surprise. It surprised the hell out of everyone with the DS, a daft, stupid idea for a handheld console that everyone expected to be trounced by the much more comprehensible PSP. It surprised everyone with the Wii, a weird, tiny, underpowered system with a controller that looked nothing like we expected – so odd that it led me to rather bluntly ask Iwata what he planned to do if everyone hated it and the system flopped, hence his comment above. The DS is the best-selling console in history (or at least, tied for that honour with the PS2); the Wii trounced the Xbox 360 and PS3 in the last generation of hardware. Nintendo does exceptionally well when it surprises people. It creates a clear gap between itself and the competition and makes “the Nintendo Difference” into more than just a silly slogan. Even those who own a more “mainstream” console end up wanting a Nintendo one too, because it’s so interesting and different, while those from outside the core gamer market find themselves intrigued by the very peculiarity and curiosity of the devices and their software.
3DS and Wii U fail the surprise test. They’re practically indistinguishable from their predecessors, both in appearance and in branding. 3DS suffered terribly from being mistaken for a new version of the original DS hardware; the Wii U, I suspect, is doing even worse, with many consumers not realising that it’s a new console entirely and not a new controller for the Wii. There’s been a disastrous failure of communication, branding and marketing, which has compounded the more basic error – assuming that the success of the Wii meant people wanted more of that kind of thing. Nintendo’s strength is providing people will surprises, things that look daft to begin with and then turn out to be precisely what we always wanted and never realised. If it’s to successfully come back from its present mess, it needs to do so by surprising us, not by following along the dull path analysts would now demand of it.
That, I earnestly hope, is what the company is working hard on in Kyoto right now. I don’t want Nintendo to abandon the Wii U, and I don’t think that will happen. The installed base is small, but big enough to be worth caring about, and the console still has the makings of a profitable platform, albeit a niche one. However, alongside continued support for the Wii U (and hopefully, a drastic change in marketing and branding), Nintendo is hopefully also working on something else; something more important and simply more Nintendo; its next big surprise.
Nintendo reportedly is looking to mobile devices to save its struggling business, after it admitted last week that the Wii U isn’t selling.
On Thursday, Nintendo slashed its Wii U sales forecast, acknowledging that despite previously expecting to shift nine million units between April 2013 and March this year, it now expects sales of just 2.8 million. Nintendo’s 3DS console isn’t selling well either, leading the firm to admit that it expects to post a $240m annual loss.
These clearly are signs that Nintendo is losing its appeal in the gaming market, and although there are still many dedicated Wii U gamers out there, the firm is struggling to compete against the Sony Playstation 4 (PS4) and Microsoft Xbox One games consoles.
It seems that Nintendo is starting to realize this too, and it admitted over the weekend that it might look to mobiles and tablets to save the future of the company, following rumors that the firm may be planning its own Android tablet for educational use.
Although the company had previous said that you’re unlikely to ever see Mario Kart running on an iPhone, Nintendo president Satoru Itawa hinted that the firm’s stance on mobile devices has changed, with the company exploring the possibility of bringing its titles to smartphones and tablets.
“We are thinking about a new business structure. Given the expansion of smart devices, we are naturally studying how smart devices can be used to grow the game-player business,” Itawa said.
“The way people use their time, their lifestyles, who they are have changed. If we stay in one place, we will become outdated.”
However, Itawa admitted, “It’s not as simple as enabling Mario to move on a smartphone,” hinting that the firm will develop dedicated games for mobile devices, rather than porting those it already has.
While Westerners are shunning Nintendo as if it were a rabid dog, the console maker is hoping to make in roads into China.
China just announced that it was allowing consoles made by western companies to exist in the country for the first time in 14 years. The move could pave the way for Nintendo, Sony and Microsoft to enter the world’s third-largest video game market in terms of revenue. But it is Nintendo, which is much cheaper, which could be the winner.
The most popular video games in China are often free to play with gamers only paying for add-ons such as weapons or extra lives.
Price may also be a problem for console makers looking to expand in China. More than 70 percent of Chinese gamers earn less than $660 a month. Nintendo, being cheaper, might do better.