Nintendo has been rocked this morning by an analytical article in respected Japanese daily, The Nihon Keizai Shimbun, in which a senior Nintendo source is quoted as saying that the GameCube cannot compete in today's market. Compounding this statement, the anonymous source goes on to state that Nintendo may well move to a software-only business model.
To quote the Nihon Keizai Shimbun, "There is no way we are going to win competing in the same arena as electronics and computer makers," a senior Nintendo official said. "Our best option is to build on our software development abilities."
The article concludes, "So as the gaming market shrinks, Nintendo has declined to go face to face with Sony, which is taking its game machines into the realm of digital appliances, and will instead seek to survive by concentrating on the market for children". This is perhaps the most damning report on any of the three hardware manufacturers seen to date.
Nintendo was quick to respond this morning, releasing the following damage-limitation focused statement:
"Contrary to what has been reported in one Japanese publication, Nintendo is staying in the console hardware business and still plans to launch our next home console in the same timeframe as our competitors. In addition, we are working on a number of complementary technical advances that we believe may significantly enhance the gaming experience. We also continue to look for exciting ways to extend the value of the GCN, and will share those ideas with you in the coming months. Specific details about other accessories or systems and their functionalities haven't yet been made public. However, we will make further information about our next console available in the near future, and we look forward to further demonstrating our record of breakthrough innovation in video game play."
However, some analysts have perceived this statement to be as dangerous as the initial Japanese report. Nintendo seems to be building a peripheral-driven strategy in the gap between the next generation roll-out, likely to be in late 2005. As peripheral-reliant gaming is a relatively untested market, Nintendo would be essentially required to reinvent something as successful as the dance mat again and again, perhaps to the detriment of its core developmental focus.
We'll keep you updated as this amazing story unfolds.