Apple eats into Nintendo, Sony sales as iPhone plays to gamers

By Ragnhild Kjetland
(c) 2010 Bloomberg News
Wednesday, September 8, 2010; 6:08 PM

When Max Batch wants to play a video game, he turns to his Apple Inc. iPhone.

The 22-year-old German has shunned hand-held consoles such as Sony Corp.'s PSP and Nintendo Co.'s DS, joining a growing number of people who use their smartphones for online and other games, eroding sales of the dedicated handsets.

"It's not worth having a hand-held," said Batch, who spends about 2 euros a month on mobile-phone games and tried out Sony's Playstation Portable at the Gamescom fair in Cologne, Germany, last month. "I have an iPhone and when I want to play, I download something from the app store."

With more processing power and better graphics than their predecessors, smartphones are eating into the market dominated by Nintendo and Sony. Shipments of game-capable mobile phones are set to rise 11.4 percent to 1.27 billion this year, researcher iSuppli said last month, while those of video-game consoles may be little changed at 52.3 million and portable units may drop 2.5 percent to 38.9 million.

"With casual gaming dominating the market, the iPhone is starting to give the traditional hand-held DS and PSP models a run for their money and will likely continue into the future," iSuppli researcher Pamela Tufegdzic said. Revenue from hand-held gaming units is estimated to be little changed between $5 billion and $6 billion this year, iSuppli said.

Apple's iPad is another threat. With the success of the tablet computer prompting companies such as Toshiba Corp., Samsung Electronics Co. and Research In Motion Ltd. to develop similar devices, console makers may be set for more competition.

"There's certainly increased competition between the hand- held platforms and the mobile devices," John Schappert, chief operating officer of Electronic Arts Inc., said in an interview. "I think there's going to be incredible growth happening on the iPad and the iPhone and the Android devices." Android is Google Inc.'s operating platform.

The multi-purpose capabilities of mobile phones are making them the platform of choice for young gamers.

"In some countries the first digital entertainment device that people there might touch is a mobile phone rather than a PC," Chris Lewis, vice president of Microsoft Corp.'s EMEA Interactive Entertainment Business, said in an interview.

Microsoft, the maker of the best-selling Xbox360 console, doesn't have a dedicated hand-held device. It now wants to attract players on the move with games on phones that use its Windows Phone 7 operating system.

The boom in mobile-phones games is prompting software makers to adopt existing games to the new market segment.

Some games, such as "Max and the Magic Marker" from the Danish studio Press Play ApS have their roots in the console and hand-held market and will now be available on the Windows 7 Phone, Matt Booty, general manager of Microsoft's mobile game studios, said in an interview.

CONTINUED     1        >

© 2010