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  Analyst Greenwald Highlights Nintendo E3 Success, 'Risky' Kinect
by Danny Cowan [Console/PC, Mobile Console, E3]
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June 18, 2010
 
Analyst Greenwald Highlights Nintendo E3 Success, 'Risky' Kinect
Signal Hill senior research analyst Todd Greenwald predicts widespread success for Nintendo's upcoming 3DS, but warns that motion-sensing peripherals from Microsoft and Sony present "risky" propositions.

Greenwald notes that the glasses-free 3D effects of Nintendo's 3DS are a big draw, but warns that Nintendo may face difficulty in getting its customers to adopt the new technology at a high price point.

"With its huge fanbase and widespread 3rd party software support, the only thing that could derail the 3DS now is too high of a price point," Greenwald said. "We think $199 is the best bet."

In contrast, Greenwald describes Microsoft's motion-sensing peripheral Kinect as "a big risk." Greenwald explains that while price will play a big role in whether the technology catches on, Kinect also presents a significant challenge for Microsoft's marketing department.

"Kinect clearly appeals to the casual gaming crowd, and offers very little for core gamers (who make up the vast majority of the 360 installed base)," Greenwald notes. "So the most likely consumer to benefit from Kinect likely doesn’t yet own a 360 (and may already own a Wii), therefore they obviously need to buy Kinect and a 360, which will cost upwards of $400."

"At this point in the console cycle," Greenwald concludes, "the entry price points for new gamers should be coming down, not up."

Greenwald finds that Sony's Move accessory, in comparison, adopts a "more measured approach to motion controls, by doing what has already been done before on the Wii, but doing it in HD and with more precision."

"That said," Greenwald continues, "the Move isn't cheap either – while the main bundle is just $99, most households will need at least 2 controllers, driving the price up to $150 or more."

Greenwald predicts that both companies' motion control products "will have limited impact in near term," and warns that small install bases will make it difficult for publishers to generate significant revenue from compatible products for "quite some time."
 
   
 
Comments

Jeremy Reaban
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I think the actual bottleneck with the 3DS is production/distribution. Even at $300, it would fly off shelves. At least for the first six months.

I could see Nintendo doing some sort of pack-in game deal for a while, then selling it by itself when sales taper off.

Pretty much what they did with the Wii. $250 in the US with Wii Sports, $200 in Japan w/o it.

Chris Melby
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Same here on the price not being so high. I'm guessing $200 or less.

Joe Cooper
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I would hope Nintendo would never be so stupid as to price a handheld at $300. It'd wind up like all the $600 home consoles. Playstation 3, Pippin, Neo Geo... What else what else... 3D is very novel but so was two screens back when the DS was introduced and they didn't charge $300 for that.

Merc Hoffner
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Total guestimation out my butt (guided a bit by isuppli teardowns of mobiles), but here goes:

Motherboard: $5
Wifi Tranceiver: $5
Arial: $1
Controller Chip: $3
Ram: $5
NAND flash: $5
CPU: $10
GPU x2: $20
Speakers and microphone: $3
IR port: $2
Accelerometer: $3
Gyro: $4
Battery: $4
Transformer: $4
Power Circuit: $1
VGA Camera x3: $15
Casing: $5
DSP: $2
Mechanisms: $1
Buttons and controls: $4
Large asymetric pixel screen: $16
Fixed Parallax Overlay: $6
Secondary Screen: $10
Resistive Touch overlay: $10
Hardware Codec: $3
Assembly: $6
Lisencing: $4
Packaging: $4
Shipping: $10
Retail take: $10

Total: $181

I'm probably out on a bunch of parts, and missing others, but I'd like to think the errors average out: Either way, it's easy to see how Nintendo could probably reasonably price at $200, cover all the costs, and still pull a decent margin. $250 maybe for mega profits, but talk of $300 is a bit extreme I reckon. I know they'd rather price it profitable but affordable than uber-profitable and exclusive.

Jeremy Reaban
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Nintendo has steady been increasing the $$$ of its handhelds. $139. Then $169. Now $189 (the XL).

The markup on the XL has to be what, $50-60? It won't be any less for the 3DS.

Nintendo doesn't even need the 3DS to sell for a while, with Pokemon & Golden Sun coming to the DS at the end of the year. Even if you think it wouldn't fly off the shelves at an inflated price (a low price only benefits scalpers)

Chan Chun Phang
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Isn't it limited supply instead that benefits scalpers? And it isn't true that normal purchasers don't benefit either, it's just that scalpers are naturally louder, like trolls. :p

Jerry Hall
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Who else here purchased the $200 HD-DVD MS hardware add-on? I'm getting some buyer's remorse already with the Kinect...and I didn't buy it yet.

Nathan McDonald
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Price for the 3DS doesn't seem like a problem, look at the iPad. Kinect and Move seemed risky from announcement, only time will tell, but I will be getting neither.


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