http://www.gmrmagazine.com/article2/0,4364,1361387,00.asp

With the industry evolving and the PSP on the horizon, is the Nintendo way
still the right way?

"Nintendo wants it all, and we don't think there's any reason that we
shouldn't have it all."

Strong, but maybe not unfamiliar words from the company that revived and
ruled
the videogame industry in the 1980s. "If you look back to the beginning,"
says Perrin Kaplan, Nintendo of America vice president of marketing, "we
were
all happy campers. Everyone made a lot of money, and a lot of products were
sold." Oh, Nintendo is still making a lot of money (over $550 million of
profit in the first part of 2002, as the company enjoys pointing out), but
due to various miscues and blunders during the 1990s, it's no longer the
singular dominant force in today's videogame market. Sony's PlayStation
brand
rules the majority of the world's growing gaming population, as well as the
majority of third-party software publishers. And Sony now faces stiff
competition from Microsoft, a newcomer to the console market, which has
billions of dollars to spend on success. Yet in the face of such
adversity-and as the ever-growing game industry adapts to the changes of the
21st century-Nintendo proudly continues to do things its own way, just like
it did more than 100 years ago.

Is this the right direction for the company to take? Is it a sound business
plan to deviate from the path Sony and Microsoft want to follow? Recently, a
sentiment spreading throughout the industry holds that Nintendo is marching
its own way right out of the home-console business. This perception was only
fortified by Nintendo's GameCube display at E3, which bore no striking
resemblance to what Sony was showing at the PlayStation booth. And you
certainly couldn't have confused GameCube's lineup with what Microsoft's
Xbox
had to offer. While the two corporate giants heavily promoted their lineups
of simulation racing games, first-person shooters, sequels to popular first-
and third-party franchises, and numerous online games (which may well be the
Next Big Thing), Nintendo capped off its press conference with a
demonstration of...uh, Pac-Man. The question "What are they thinking?"
remains a common one among industry analysts, journalists, Internet message
boards, schoolyards, and game stores across the country. GMR thought it was
a
good time to go straight to Kaplan and NOA PR Manager Tom Harlin, and find
out exactly what Nintendo is thinking about its future as a game company-and
whether or not the Nintendo way is still the right way.

What's Your Problem?
Not surprisingly, Nintendo has multiple takes on its current status in the
console war.

Geist is one of the more adult titles in development for the GameCube.

"There are three different ways we can look at that," says Kaplan. "One
would
be how we are doing financially, and we're clearly No. 1. Second, where are
we perceptionwise, and we suffer being third there. And then the third is
the
actual reality of the market share, and I'd say that we're No. 2 worldwide."
That Nintendo perceives itself to be in first, second, and third place,
clearly demonstrates that this is a complicated issue. Sony obviously leads
the pack in terms of worldwide market share, positive perception, and
third-party support. But trailing Sony is understandable-PlayStation has
been
the dominant force in the industry since the late 1990s and shows few signs
that it'll be giving that up anytime soon. Microsoft, on the other hand, is
the new kid on the block-and, at least in the United States, that company
holds an image advantage over Nintendo. Xbox also enjoys a lead over
GameCube
of roughly 1 million units shipped to American retailers. Running virtually
neck-and-neck with one of the largest and most aggressive corporations in
the
world for the precious few console dollars Sony doesn't get ought to be
Nintendo's primary concern.

Feuding Neighbors
Yet, when it comes to Bill's billions, Nintendo doesn't seem the slightest
bit
worried. "Even a company as strong as Microsoft has had trouble penetrating
this business," says Kaplan. "There's no company in the world that could do
what Microsoft has done. [No other company has] the financial wherewithal,
[has] the other parts of the company propping it up, has shareholders that
would allow them to have a product where you're basically paying the
consumer
to buy it...they will lose [money] into perpetuity, period."

This perceived financial advantage over Microsoft-based on the belief that
it
will never make a profit on Xbox-seems to be the reason Nintendo is so
confident that its conservative and efficient business model will keep it
alive in the never-ending console war. "We're very well run that way,"
Kaplan
explains. "We're always making a profit on our hardware; we don't just live
to make profit on the software." In essence, Nintendo is betting on
Microsoft's shareholders unwillingness to tolerate more massive losses if
Xbox 2 doesn't take off.

Aside from the financial aspect, isn't Microsoft's image of having games
such
as Halo and Doom III, which are more appealing to an adult demographic, an
advantage Nintendo lacks? Apparently not, according to Kaplan.

Mario Kart leads the way for 2003 holiday releases.

"Because they chose to do that, they chose to pick a certain segment of the
demographic, and Microsoft is having a heck of a time expanding out of that.
That's their niche, the older guy." And it seems there's some credence to
that-the first batch of games Rare is making for Xbox-games Microsoft
promoted heavily during its press conference and at its booth at E3-would
have been a perfect fit for GameCube. Again, the perception problem:
Nintendo
is too focused on kids and Microsoft is too focused on adults. Where is the
valuable common ground? "When we increase our market share, it's not from
Microsoft. It's from Sony. There are people turning 6 every day, and we want
to capture those players," says Kaplan. "There are people turning 26, and we
want to continue to have games for them." The problem draws similarities to
American politics. A candidate must lean far left or right in the beginning
to win over the core base, but to win the general election, you have to be
appealing across the board. Nintendo claims it's starting to realize this:
"We have the same stuff everyone else does, but because of the perception,
people don't go looking."

Ditching The Lunchbox
So, how does Nintendo fix its perception problem? To start, it can look at
the
mistakes it's made with GameCube. There are plenty of reasons GameCube is
seen as a console for kids, but the most obvious one is the look of the
hardware itself. Kaplan admits, "Maybe our color choice for the hardware was
not of instant appeal to everybody." No kidding. If you've seen a Nintendo
advertisement in the past few months, you may have noticed that the
purplish-blue has been replaced by a far sexier platinum-a wise move, but
the
damage is already done. Nintendo learned the hard way that "cool" plays an
important role in the minds of consumers. "In hindsight," she concludes,
"maybe people thought it looked a little bit like a lunchbox."

rest of it is here:
http://www.gmrmagazine.com/article2/0,4364,1361239,00.asp