Nintendo DSi Not Seen Competing With iPhone, Touch — For Now

By Amy Gilroy -- TWICE, 4/6/2009

NEW YORK — Nintendo's just-released DSi adds an audio player, digital camera, ability to download games via Wi-Fi and an improved Web browser, but it and the iPhone and iPod Touch won't compete head-to-head even though Apple has promoted the game-play abilities of its devices, retailers and analysts told TWICE.

Retailers such as J&R Music World and Nebraska Furniture Mart, numerous distributors and several analysts agreed with IDC gaming analyst Billy Pidgeon, who claimed that “neither category will surrender sales to the other.”

Even the Sony PlayStationPortable (PSP), hailed as a game changer when it launched in 2005, failed to put a dent in the iPod stranglehold. Diffusion Group president Michael Greeson noted, “The PSP was premised as a multimedia device, and it has pretty good sound, and it didn't change the game in any way. [Sony] added VoIP at one time to make it a game changer, and that didn't work out well, and they decided to drop it.”

Nintendo shipped 100 million DS platform devices worldwide since its launch in late 2004. Apple has shipped 30 million iPhone and iPod Touch devices worldwide, which are able to access more than 6,000 games from the App Store.

A few Apple aficianados will tell you that the iPhone will eventually become a gaming platform to compete with Nintendo, but most industry members say that the iPhone apps are casual games that don't compete with the quality of Nintendo games, at least for now.

Now that Nintendo has launched its own over-the-air gaming store for direct downloads to the DSi, Pidgeon predicted, “Nintendo is likely to sell better interactive entertainment over-the-air on the device more effectively than the App Store can.” Of the thousands of games on Apple's App Store, many are low-quality games. He likened the App Store to a “44cent” store filled with a mixed bag of cut rate and good items.

Down the road, however, the iPhone may prove a more serious competitor to the DSi, said Larry Reich, president of consultant Digital Age Communications and self-avowed Apple zealot. “The fact that [many] major gaming company and [almost] every major media company is now developing an app for the iTunes App Store is enough of a statement.... If you are Nintendo, you have to worry...The word tsunami doesn't even describe what is going on with the iPhone/iPod Touch in terms of software development and usage. The products are redefining mobile entertainment.”

In the interim, DSi could prove to be a game changer within its own category as its new multimedia capabilities could yield new genres of games and other applications.

Said Toys 'R Us VP/divisional merchandise manager Bill Lee, “Beyond offering great sound and graphics for gaming, the DSi features two cameras that allow kids to mix images, scribble on photos and create new faces...In addition, with wireless Internet capability, kids can even use the DSi to conduct research for school projects, learn a new language or correspond with friends.”

Pidgeon noted the DSi allows “gamers to make, edit and share multimedia messages and content, including mash-ups of photos, video, graphics and audio. I'm very curious to see how the youth market responds to the DSi.”

The DSi features a media player and an interactive voice recorder (both absent on the earlier DS Lite) so users can “play with their music while they listen to it,” said Nintendo. Kids can control the pitch and speed of recorded voices or music files to change the tempo of a song.

The new unit adds an SD card for the first time to the DS platform so users can store music on the card. It plays only AAC audio files, however.

The DSi also adds two 0.3-megapixel cameras (the DS Lite had none). One camera aims at the user when the device flips open, and the other, located on the outer shell, can take photos for sharing on the Web. The DSi also includes Wi-Fi, as did the DS Lite, but adds an improved Web browser.

“Nintendo and Apple are much alike,” said D&H sales senior VP Jeff Davis. “Apple has that ability to connect to the consumer in an innovative way, and Nintendo does as well.”

Now it remains to be seen how the product is received. As Davis said, “Before Wii came out, no one would have ever predicted Grandma would use it.”