Will Nintendo Be Able to Reach the Next Level of Product Innovation?

Nintendo's 3DS portable handheld

As described today by Edwards and Fujimara in an article in BusinessWeek, the pressures on companies to innovate its electronic products are more overwhelming than ever. The United States’ video-game software and hardware sales fell 5 percent last year. Once a leader in its market, Nintendo has endured two years of declining sales and its net loss has increased from 260 million dollars to 838 million dollars. Why? Because the company has been struggling to compete innovatively with its electronic game opponents.

Nintendo’s main sellers are its 3DS portable handhelds, Wii consoles, and the games that go along with these systems. Its console design is six years old and it does not offer high definition graphic games. The company’s failure to attract game developers through its innovation development has Nintendo lagging behind Sony and Microsoft in sales.

However, Nintendo President Satoru Iwata begs to differ that his company is falling behind. He believes that the Wii U, scheduled to be ready by the 2012 holiday season, will help the company gain back profits. The new system is based on a touchscreen controller that allows users to shift content between the controller and the television, to switch games’ camera angles, and to change the lighting. The Wii U will have the capability to allow users to online shop and to download new game levels.

After reading Putting Leadership Back into Strategy by Cynthia A. Montgomery, we learned that great firms strategies evolve and change due to internal and external forces. Despite Nintendo’s previous success with the design of its portable handhelds, the company has to be careful with holding too strongly onto this competitive advantage that may have lost its value. Like the BusinessWeek article explains, Sony and Microsoft are adapting their systems to be multipurpose devices in order to compete with mobile devices and Facebook games, which has attracted game developers. It is vital for Nintendo to recognize that mobile technologies are progressively threatening competitors and that the company needs to shift the purpose of its handheld devices to satisfy mobile desires.

Nintendo's Wii U

One of the main questions Montgomery focuses on in her article is “If your company were shuttered, to whom would it matter and why?” Other than Nintendo’s legendary Mario games, I personally do not see any attraction to its other products in comparison to Sony’s and Microsoft’s. These companies, unlike Nintendo, are determined to stay competitive in the market by featuring powerful graphics and updated wireless abilities. Although Iwata claims the new Wii U’s touchscreen and wireless technologies will attract customers, he is forgetting that Sony’s PlayStation Vita handheld console is a major challenger to beat. Also, Edwards and Fujimara make a valid point that touchscreen is not an out of this world technology anymore and “may not generate the same buzz as the breakthrough motion-controller.”

If Nintendo wants to remain a major competitor in its market, it first needs to start innovating its products. Iwata needs to maintain an open mind and be flexible with respect to the purpose of the design of Nintendo. Because one of the company’s main resources is its brand name, Nintendo needs to withhold its brand name’s reputation and design the games and systems that once used to create a “buzz” in the market.