Friday Takeaway: It Doesn't Just Play Games

Despite the popularity of handheld gaming devices, there are still only a handful of key players. Apple is relatively new to the market, but it has quickly gained a strong foothold with the iPhone and iPod Touch. The iPad has once again raised the bar and in ways that give it a dramatic edge over its closest competition: it does everything.

Sega tried a few times in the past to get its foot in the door but failed, and Microsoft has yet to fully cross the threshold into portable gaming. Nintendo has long been the dominant hardware maker, with Sony and its line of PSPs making significant inroads but still playing second fiddle to the DS. With the iPod Touch and iPhone, Apple finally got into the gaming market, which it had long failed to do with the Mac. All of a sudden, indeed almost overnight, Nintendo and Sony had a surprising new competitor.

Sony has many reasons to be worried; even though it's a more powerful machine than the DS, it has constantly faced serious problems (poor control scheme and the failure of the UMD format to catch on to name a couple). It also lacks much of the innovation brought to the table by the various DS iterations: touch controls (via stylus), a built-in camera, dual screens, and the like.

Nintendo proved with the Wii that superior graphics and sound don't necessarily equate to a better selling platform, and the DS, following a similar pattern, is far more popular than the Wii. The problem for Nintendo is that the era of gaming-only machines is drastically coming to an end. We'll always have to have some sort of hardware to play games, but systems designed solely for playing games are facing extinction. Even the Wii now lets you stream Netflix movies and surf the web.

Sony took a gamble with the PS3 by including a Blu-ray player, and it helped that format win the HD war and become a viable modern alternative to the DVD. The PS3 also offers online movie rentals and purchases, a rumored music service coming soon, Netflix streaming, downloadable games, and likely much more on the horizon. People are looking for extra value in their hardware; something that plays games is good, but something with the built-in ability to enhance other areas of our lives makes the package much more attractive.

Enter the iPad, a do-it-all machine. Surf the web, watch movies, listen to music, do your taxes, write a paper, update your blog, chat, check your Twitter feeds, map a vacation route, read a book, create music...all of that is already available a month after launch, and it's a platform designed to continuously grow with its apps. The other players in this game for market dominance simply can't compete. Web surfing on the PSP, for instance, is abismal, and while the stylus is great for certain applications, using your fingers is much more intuitive.

And what is Nintendo's response to the triple Apple threat? Just after announcing a new, larger DS, they immediately followed up with yet another DS replacement, this time in 3D. Not only is 3D an unproven market, but this thing is still a machine designed solely to play games.

Granted, I don't foresee Nintendo shuttering its offices any time soon; DSs and whatever comes after them will continue to sell, but I fully expect its marketshare to decrease. iPads (and whatever else Apple has up its sleeves) will come down in price, they will do even more than they do now, and they will continue to offer a smorgasbord of games, many of which target the casual audience.

Years ago, everyone was gaga over the notion of creating a set-top box in your living room that would do everything. The iPad is exactly that device except that it's mobile, more personal, and ultimately better for it. Add on the fact that it's a more-than-capable machine to play handheld games and you would be hard pressed to deny that it is ushering in a new mobile era. Now it's Nintendo's turn to play catch-up. But is a company so slow to adapt to change going to be able to do so in time? And does Sony even have a prayer?