Wii will rock you

Fortunes’s Jeffery M O’Brien explains how Nintendo’s new game machine won over the world – and beat the pants off Microsoft and Sony.

So the past few days I did a crash course revision on the history of Nintendo, the evolution of the company and the people behind the recent successes of the company. I scoured blogs, websites official and unofficial, wikis and even books to get myself updated on the big hoo haa on what has made Nintendo so successful in the recent years, since the introduction of the Nintendo DS.

“While game consoles typically attract youngish males with an antisocial streak, the Wii is bringing people of all demographics together: in nursing homes, for Wii bowling leagues, on cruise ships, at coed (!) Wii-themed parties and, of course, in lines – as hordes of consumers clamor to buy the impossible-to-find $250 machine. Nintendo is churning out over a million units a month and still can’t meet demand.”

It has been a pretty educational experience till i came a cross a very interesting article, written by a Fortune senior editor. He wrote about the recent success and rise of Nintendo, touching upon the the hardware, gameplay and the company’s philosophy that propelled the company to become the top 10 Japanese company.

In this article, he introduced the man behind the legendary franchises under Nintendo, and quickly touched upon the machines itself and how well it sold around the world.

“Tokyo’s Akihabara district, shopkeepers complain about the lack of inventory. Wii displays are covered with SOLD OUT signs, while piles of PlayStation3 boxes carry a different message: 5 percent OFF”

“While Sony lose money on hardware in hopes of seeding the market with their consoles, analysts say Nintendo makes about $50 on every unit. It may not sound like much, but the company plans to sell 35 million of these things over the next few years. That’s $1.75 billion in potential profit. Add that to the ridiculous earnings from the company’s handheld gaming device, the Nintendo DS, as well as software sales and licensing revenue, and you begin to understand why Nintendo’s market cap just passed $45 billion, an all-time high.”

He then gave brief stats on the numbers of consoles and handhelds sold as compared to Sony and Microsoft. Then it goes to translate the amount of profit it has generated thus far before going back to the company’s roots.

After that he went about how the wii was created, comparing the parts, features and price comparisons between Sony’s PS3.

“The Wii busted that mold. First, Nintendo used off-the-shelf parts from numerous suppliers. Sony co-developed the PS3’s screaming-fast 3.2-gigahertz “cell” chip and does the manufacturing in its own facilities. Nintendo bought its 729-megahertz chip at Kmart. (Not really. But it might as well have.) Its graphics are marginally better than the PS2 and the original Xbox, but they pale next to the PS3 and Xbox 360.”

This and the Nintendo’s ability to break the mold of the video game industry has rocked Microsoft and Sony with their behemoths and assumptions that each console has a certain lifecycle.

“We looked at the capabilities of the Wii early on and saw that it was solving the most important element in the game industry – accessibility,”

Very interesting cross analysis on the different paths Sony and Nintendo is trying to make in the volatile video game industry. Click here to read more.

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