Daniel Eran Dilger
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iPhone 2.0 SDK: Video Games to Rival Nintendo DS, Sony PSP

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Daniel Eran Dilger
When the iPhone was unveiled a year ago, it was obvious that it would outclass the status quo in mobile phones, particularly in the US where mobile operators have been holding back innovation. Far less obvious was the potential for the new phone to rival dedicated handheld gaming consoles. Here’s how well the iPhone stacks up against the Nintendo DS and Sony PSP in both hardware and as a business model.


Not a Fair Fight.
At first blush, one likely wouldn’t think of the iPhone as being in the same league as handheld gaming consoles. However, when Apple showcased a half dozen prototype apps at the SDK launch, fully half of them were games. Clearly, Apple isn’t going to be ignoring games on the iPhone.

The most obvious competition the iPhone faces is the leading Nintendo DS and the distant runner up, Sony’s PlayStation Portable. Incidentally, both gaming units appeared on the market in late 2004; the iPhone benefits from being nearly three years younger, and therefore based on considerably more modern technology. However, gaming isn’t an easy market to break into.

In addition to the very popular DS and the runner up success of the PSP, there have been notable failures in mobile gaming. Nokia’s Symbian-based “side talking” N-Gage, released in late 2003, fell dramatically short of sales goals and turned into an embarrassing joke for the company. In early 2005, Microsoft worked with Gametrac to deliver a WinCE based gaming device called Gizmondo; that company fell apart after scandals erupted involving executives’ ties to a Swedish crime ring and massive embezzling and reckless spending resulted in its bankruptcy. It didn’t help that Gizmondo was branded the “worst console of all time” by gamer magazine writers.

The Spectacular Failure of WinCE and Windows Mobile

Playing the Console Game.
Successfully deploying a game console is a lot of work and a lot of risk. The hardware has to deliver competitive features while also being priced low enough to attract a large audience of buyers. There’s also the catch-22 of selling units before enough game titles exist, or alternatively, lining up developer support before having sold any units to players.

Gaming heavyweight Sega pulled out of the living room games console business entirely after the tepid launch of the Dreamcast in 1998. Despite pioneering hardware, the Dreamcast suffered from poor marketing and was subsequently blindsided by the smash success of Sony’s PlayStation 2 nearly two years later.

However, Sony’s own efforts to enter the handheld gaming world, long dominated by Nintendo, didn’t materialize as planned either. Despite attractive hardware and its association with the most popular series of living room consoles ever, the PSP has fallen short of selling half as many units as the DS: 31 million PSP units versus 65 million DS. Nintendo also still sells the earlier generation Game Boy Advance, which has sold an additional 81 million units since 2001. Combined, Nintendo has sold nearly as many handheld gaming units since 2001 as Apple has sold iPods.

Microsoft similarly proved that its desktop PC monopoly power was no match for the entrenched players in the games console business, losing tens of billions on the original Xbox and Xbox 360 while remaining in a distant also ran position. Just two years into its massive investments in the 360, the console has already seen sales fall of dramatically in its second year, and entering 2008, it has consistently slipped behind the PS3 in monthly unit sales.

Video Game Consoles 2007: Wii, PS3 and the Death of Microsoft’s Xbox 360

Video Game Consoles 2007: Wii, PS3 and the Death of Microsoft’s Xbox 360

Apple’s Quiet Gaming Strategy.
Apple seemingly wouldn’t stand much chance in throwing its own ring into the rough and tumble games console business. Its last effort, a licensing deal with Bandai to resell a low end PowerPC Mac as the 1995 Pippin entertainment system, was a notable failure.

Rather than directly competing against the big players, Apple has been developing games for the iPod in what has appeared to be a Steve Jobs Hobby since late 2006. However, those efforts translate directly into the new iPhone development platform, as Apple has used iPod games to perfect a system for secure digital software delivery through iTunes.

When the games appeared, it was a bit of a surprise to see what the iPod could deliver. It shouldn’t have been; the 5G iPods have the same ARM7TDMI processor as the Game Boy Advance (the iPod actually has two), a higher resolution 320×260 screen compared to the GBA’s 240×160, far more RAM (64MB) and plenty of disk storage to avoid needing to carry around any cartridges.

The iPod could deliver these major hardware advantages over the GBA because it was designed to be sold for around $400; the GBA was intended to retail for around $200. The iPod certainly wasn’t designed to compete as a gaming device, but its latent capacity makes it a viable alternative for the tens of millions of users who already have an iPod and want to use it for new things. Apple’s pioneering $5 game market also lowers the threshold for impulse buying.

Hacking iPod Games: How Apple’s DRM Works

Can a Phone Play Real Games?
The iPhone has similar hardware advantages over the DS and PSP, both of which were engineered to sell at much lower price points. The DS originally sold for $149 (and is now $129), and the PSP debuted in the US at $249 (now sells for $169). The 8GB iPhone debuted at $599 (and now sells for $399).

Apple’s engineers not only had a bigger budget to spend, but could use more modern technology given that Apple released the iPhone two and a half years later. Here’s how their hardware compares:

Nintendo DS: Late 2004
67 MHz ARM 946E-S (N-Gage processor) + 33 MHz ARM7TDMI (same processor as the original iPods)
4MB RAM
256KB Flash + cartridge storage
Dual, 256×192 3“ displays; one is stylus touch sensitive
No accelerometers
No camera
No mobile radio
WiFi 802.11b/g
No Bluetooth

Sony PSP: Late 2004
333 MHz MIPS R4000 CPU + GPU with 2 MB onboard VRAM running at 166 MHz
32 MB main RAM (new models expanded to 64MB), and 4 MB embedded DRAM. MemoryStick storage, UMD media
480×272 (368×207 usable for video); no touch screen features
No accelerometers
No camera
No mobile radio
WiFi 802.11b
No Bluetooth

Apple iPhone: Mid 2007
Samsung ARM SoC 620 MHz 1176 running at 412 Mhz + PowerVR MBX 3D GPU
128MB RAM
8 or 16GB Flash storage
320×480 3.5” display with finger multitouch input
Accelerometers for direct physical control
2 Megapixel camera
Quad band GSM + EDGE
WiFi 802.11 b/g
BlueTooth 2.0 EDR

The iPhone is in a significantly different class of performance, has far more internal resources for games, and is equipped with a variety of other hardware–from its camera to its ubiquitous (if slow) mobile network to its multitouch high resolution display and accelerometers–all of which have to power to unlock entirely new classes of games and other more serious applications.

As a handheld console, this feature set makes the iPhone a bit like the Wii, with interactive new gameplay features, and a bit like the PS3, with higher performance gaming specs and additional online and media capabilities. Buyers won’t have to decide if they want a handheld game console; they’ll get it for free when they buy the iPhone or iPod Touch.

Further, because Apple is attaching game development as a sidecar dessert on top of a device that is primarily monetized as a hardware sale (boosted by retail and accessory sales, media sales, and carrier revenue sharing), developers will get more bang from their buck and will incur less risk developing games for the iPhone. The iPhone has also already proven itself as a very desirable smartphone, even before the arrival of any native games, ameliorating the worries of a whether games developers should invest in the platform.

The iPhone’s development tools are more approachable to a wide audience of developers already familiar with the Mac, they’re significantly cheaper to obtain and get started with than other consoles, and game distribution will be much easier and more lucrative because Apple doesn’t need to squeeze fat licensing fees out of its developers to make money. In fact, Apple will do best by continuing to give developers those groundbreaking 70% royalties on their software sales, encouraging a wide and deep gaming market to develop for the iPhone and iPod Touch.

Apple’s iPhone vs Smartphone Software Makers

Apple’s iPhone vs Smartphone Software Makers

The Chips and the Frameworks.
The iPhone’s System on a Chip processor bundles an ARM 1176 clocked at 412 MHz. The DS uses a pair of much earlier and simpler ARM processors, while the PSP uses the now dead end MIPS architecture, which was used in the Nintendo 64 and earlier PlayStation and PS2 consoles. Both Nintendo and Sony have since moved their modern living room consoles to variants of the PowerPC family.

That leaves the iPhone with an ideal CPU architecture for handheld gaming, and one familiar to existing smartphone developers. Above the hardware level, the Phone’s Cocoa Touch layers on a mature development framework that makes creating software for the iPhone much easier than developing for Symbian, Windows Mobile, Palm, RIM BlackBerry, and other mobile platforms.

The iPhone’s SoC also bundles a PowerVR MBX graphics processor. In the late 90s, prior to the advent of ATI and NVidia as GPU leaders, PowerVR rivaled 3dfx Voodoo graphics cards in the PC market. Sega’s Dreamcast was also built around a PowerVR graphics processor. Following the rise of ATI and NVidia, PowerVR moved into the embedded mobile arena and became the standard for mobile smartphones and related devices.

Getting performance from smartphones has often been difficult because mobiles commonly rely on their own proprietary software or least common denominator packages like Sun’s stripped down Java ME. Apple’s iPhone SDK uses OpenGL ES, the same standard graphics API used by Symbian smartphone developers and the Sony PS3. This standardization will make graphics and games development for the iPhone familiar to a wide audience.

Again, in addition to using the PowerVR hardware and Open GL ES software, Apple is also providing its own slick software integration with tools such as Core Animation, making it much easier for developers to achieve a consistent look and feel with the buttery iPhone interface without necessarily being experts in embedded video development.

iPhone ARM

Origins: Why the iPhone is ARM, and isn’t Symbian

And the Competition?
Nintendo has long held a dominant position in handheld gaming, developed through a strategy of focusing on playability. The Game Boy, GBA, and DS didn’t deliver the most incredible hardware of the time, but did serve as low cost gaming devices paired with large libraries of games licensed by Nintendo. The company has worked to maintain high quality games for all of its platforms.

That also results in making Nintendo’s platforms closed tighter than Apple. Nintendo started in its closed development plans after the Video Game Crash of 1983 nearly wiped video gaming out of retail stores. Atari had encouraged unlimited game production for the 2600, resulting in some game titles being produced in greater quantities than the console itself. The result was a glut of games foisted upon retailers and a backlash against gaming.

Nintendo successfully reintroduced gaming by positioning its new NES game console as an “entertainment system” paired with a toy robot. As gaming took off again in the late 80s, Nintendo’s strict controls gave it strong market power and delivered exceptional profits. Independent developers couldn’t ship games for the NES without a licensing agreement with Nintendo.

Nintendo ruled the roost until its deal to build a new CD-equipped Super NES system with Sony fell through, resulting in Sony leaving to develop its own PlayStation games console in late 1994. Sony maintained the same games licensing model as Nintendo. When Microsoft entered the fray in 2001 with the Xbox, it similarly relied upon software licensing revenue to partially bail out its console hardware losses.

These conventional game console makers rely heavily on software licensing fees to keep their heads above water; Apple doesn’t. Software sales through iTunes will be self supporting in an effort to drive software availability. Nintendo, Sony, and Microsoft have largely been opposed to small homebrew development, and are therefore going to be threatened by Apple’s encouragement of software development freed from licensing profiteering.

iPhone 2.0 SDK: How Signing Certificates Work

iPhone 2.0 SDK: How Signing Certificates Work

Microsoft recently unveiled XNA plans that try to achieve both: courting small developers to make online Xbox games and software for the Zune, and then subsequently taxing them as much as 70% in exchange for marketing exposure. Like Apple’s iPhone App Store, Microsoft won’t allow outside development, not because of security issues, but because that’s where Microsoft hopes to make the majority of its money. It remains to be seen how well that will work for the company, particularly given the extremely low uptake of the Zune and the year over year free fall in sales of Xbox 360 units.

Microsoft also appears to have given up all efforts to repurpose WinCE as a third party handheld gaming platform after the failure of the Gametrac Gizmondo. While the company recognizes the importance of “developers, developers, developers,” without a viable platform to sell to, those developers won’t care.

Nokia is trying to resuscitate N-Gage 2.0 as a gaming platform for its higher end N-series smartphones as part of Ovi, a portal site that also plans to sell music and GPS maps. The gaming platform will be constrained somewhat by the simpler specs of Nokia’s phones; the N81 has a similar processor, but only 96MB of RAM, a far more limited graphics resolution of 240×320, and no touchscreen or accelerometers, limiting the new N-Gage platform to the simplistic cell phone style games that have already failed to garner much attention.

Nintendo is unlikely to be pushed from its perch of selling $130 handheld game consoles by the $299 and up iPod Touch and iPhone. It has also demonstrated no interest in moving into mobile phone gaming itself. Unlike other hardware makers, Nintendo has also worked to sell its consoles at a profit while also earning software licensing revenues. That means Nintendo may be less likely to deliver games for Apple’s platform, as it would tend to draw attention away from its own handheld gaming efforts.

At the same time however, the company was quick to point out that its DS didn’t directly compete against the Sony PSP, and those two products were only $100 apart; Nintendo might therefore aim to deliver software for the iPhone because of the limited competition between the two platforms serving different markets at very different price points.

Sony is working to establish the PS3 and grow sales of the PSP before the three year old platform begins to run out of steam. PSP developers face more complex and expensive tools, which has resulted in fewer games being developed and sold. The PSP only had 2 games in the US top 50 last year, compared to 12 for the Nintendo DS.

Sony has also hampered the PSP with its preoccupation with promoting its own proprietary, physical media formats, including the failed UMD and MemoryStick. Apple’s online distribution model will democratize development and the iPhone’s wireless App Store and large Flash storage will encourage lower priced game sales in volume.

Sega no longer makes its own gaming hardware, giving it free rein to develop titles for the iPhone. It demonstrated a prototype of Super Monkey Ball using the iPhone’s accelerometers to control player movement. Sega noted that the iPhone’s 320×480 resolution meant that it had to spruce up its graphics, commenting that the iPhone supported console-style graphics rather than those typical of a cell phone.

Artificial Life, Aspyr, Electronic Arts, Feral Interactive, Freeverse, Gameloft, id Software, Pangea, THQ, and Namco Bandai have all confirmed an intent to deliver games for the platform, with Gameloft announcing plans for fifteen titles by the end of the year. Apple also demonstrated Touch Fighter, its own in house game, showing off the iPhone’s use of both OpenGL graphics, accelerometer support, and OpenAL audio for stereo sound positioning.

Touch Fighter iPhone

Ethan Einhorn, who demonstrated Sega’s Super Monkey Ball, told gaming site Next-Gen, “From a technical standpoint, the iPhone is competitive with dedicated handheld gaming devices [like the DS and PSP]. The delivery system for software will be digital and easy to use. And the ability to have all of your portable electronics needs catered to with one device is irresistible. Given all of that, the potential for the iPhone as a games platform is massive. From a technical standpoint, the iPhone is competitive with dedicated handheld gaming devices. This is a phone that offers plenty of power to work with, no compatibility concerns, and uniform input functionality. That represents an evolution in the mobile gaming space.”

10 Games Perfect for iPhone : Next Generation

As Apple migrates its 150 million iPod installed base toward the iPod Touch and iPhone, the company will pair a large user base with enthusiastic development efforts. Users will get the gaming environment as a free addition to the phone, media player, and web browser they purchased. Conversely, that also means that lesser phones with plodding web browser capabilities and simplistic media playback–as well as dedicated games consoles that really only play games–will have a hard time competing against the new platform. That should make for an interesting 2008.

More on the iPhone 2.0 SDK

iPhone 2.0 SDK: The No Multitasking Myth
iPhone 2.0 SDK: Java on the iPhone?
iPhone 2.0 SDK: How Signed Certificates Work
iPhone 2.0 SDK: Video Games to Rival Nintendo DS, Sony PSP
iPhone 2.0 SDK: Readers Write on Certificate Signing

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  • Michael

    all i can say is wow. once again, great analysis… i don’t know how you do it, you just keep impressing me and others with insightful comments! anyway, everything makes sense, except about nintendo possibly serving iphone users games… just seems like it would eat into their business at any rate. and i wonder how long the battery will last with the screen and possibly wifi going full bore while you’re playing a game?!

  • addicted44

    Really good article.

    However, Nintendo does not really worry about this. Nintendo will always be fine because of the fantastic in house game developers they have, and the great IP they have built up over the years. Also, while the DS might not be as powerful as the iphone, it is plenty innovative and has a base that will mean it will continue to rule the mobile gaming roost.

    Unfortunately, Sony is not going to be that lucky. The PSP is the first handheld gaming device that will take a hit because of the iphone.

    However, if Apple does not advertise the iphone for games, I would be surprised if it hurt either of the other 2 players, because someone looking to buy their kids a gaming machine would probably not think of the iphone.

  • sebastianlewis

    Hmm, Nintendo is the wild card here. On one hand, even though their hardware is profitable enough, this could serve as a bail out for them to stop making hardware and focus on a different platform, on the other hand I don’t think Nintendo will do that at all.

    But I think EA (or I think it was EA who said this) summed it up best: the iPhone is a canvas. While you do lose tactile feedback in gameplay, you do gain on nice big screen to think of some more creative controls rather than “virtual buttons” on the side of the screen or something stupid like that. I made quite a few comments about the possibilities here and here, and I’m sure there’s a lot more possibilities than just that, but essentially anything on screen can be used to control in game actions.

    Sebastian

  • Russell Heistuman

    It’s looking more and more like the iPhone will become the definition for the term “juggernaut.”

  • Rich

    There’s a very good discussion about this matter on the forum:

    http://forum.roughlydrafted.com/forum/comments.php?DiscussionID=856&page=2#Item_13

  • string

    Do you think this games strategy was there from the outset or did it just suddenly occur to Apple?
    I myself think it just occurred to them when they decided to release the sdk. They looked at ways to demonstrate the ease of programming the iphone and the penny dropped.

  • Wizfinger

    You forgot to mention that all of this gaming goodness will also be available on the iPod Touch, which is cheaper than the iPhone and caters a different (younger?) audience than the iPhone, and is already available worldwide, unlike the iPhone.

  • jfatz

    Wait… what?

    I usually follow the commentary quite well, but I’m noticing a few curious things you seem to be quickly glossing over:

    You’ve often spoken of MS’s Home and Entertainment division losses before, but when did it turn into “tens of billions?” IIRC from your OWN previous analysis, you pegged it at 9 billion.

    (Also a minor niggling point, but the Dreamcast didn’t really have a “tepid launch,” since it launched with better numbers that pretty much every console previously. It was still, however, quickly steamrolled by the PS2.)

    Also, regarding “groundbreaking 70% royalties,” I know you covered a number of other services in your previous article, but do they represent the bulk of them? And here you’re also doing a major comparison to the DS and PSP platforms… do we know what kind of deal companies have with Sony and Nintendo to release titles on their platforms to get full context?

    Also regarding the chips and architecture, the DS is certainly capable of delivering good games, and obviously it has not hurt their sales compared to the PSP since they launched at the same time. (No “momentum” arguments there, though one can bring up the possible impact of backwards compatibility with GBA games.) Do you see that giving the DS a cost-of-development edge against the iPhone/Touch for similarly-complex games? And do you see the PSP’s MIPS architecture being something that holds back development and/or makes it more expensive, or will any architecture queasiness be defined more by the quality of the development tools Sony provides, and–at this point–the internal tools and assets companies have build up in the past three years? Are the tools themselves inherently that much more “complex and expensive,” or would that cost be simply a pittance compared with the asset development and gameplay formulation and testing that would need to go on for games to be on graphical par, complexity, and length of what most gamers are used to?

    PowerVR, meanwhile, never really “competed” with 3dfx. No one really remembers their first uses in PC 3D expansion cards (the Apocalypse was out before 3dfx even established itself), and while their KYRO I and II were well-regarded, they were out when 3dfx was already known to be heading out the door (they were defunct the next year), and was fighting for shelf space and performance comparisons with ATi’s first Radeons, and the GeForce2’s.

    I would really imply that Nintendo “relies on heavy software licensing fees to keep their heads above water” either. They didn’t start off losing much on the Gamecube, and they’re certainly not losing anything on the Wii nor their handhelds as consoles, and in the living room consoles their biggest earners have always been their own games. They make a lot MORE money from letting others tag along, but they’d be notably successful and profitable even if it was ONLY distributing games they themselves develop and publish. (There would just be no reason to make their platform THAT closed.)

    As well, regarding your spec list, it may pay to be more thorough so it doesn’t look like you’re avoiding other platform advantages to favor the iPhone. For instance speaker quality and sound chip capabilities for headset use, if you have them… But moreover things like the built-in mic on the DS (which is used as a control and enhancement method, and which the iPhone may also be able to tap, SDK-depending), and listing which devices have separate external attachements instead of listing them at “no.” (We can obviously make up our own minds as to whether or not it would matter.)

    –cough–

    At any rate, I don’t want to come off as only kvetching, but this particular post has turned pretty long and voices my “concerns.” I’ve been very vocal about Apple being able to trojan horse their way into the landscape successfully with their mobile devices and a new kind of gameplan, but since your articles are normally chock full of info, I wanted to correct a few things I saw, and help flesh things out that I think might have been glossed over too quickly.

    I’ll make my “analysis” and “conjecture” post later, as I used up my “sitting at home catching up on a few posts” time with this, and think my next post will be long too. ;-) It’s fun stuff, after all.

  • jfatz

    /smacks self

    Should have read “I wouldn’t really imply” regarding Nintendo, of course.

  • WholesaleMagic

    Let me get it out there straight away: I think the accelerometer (plus multitouch) is an amazing feature that has many extremely practical applications.

    It also has some interesting gaming applications, as was shown by the games demoed at the Apple event a few weeks ago. It’s perfect for tilting flat, virtual surfaces, or controlling vehicles and aircraft.

    I think, though, that when it comes to games, there’s nothing like a good D-pad or control stick. Perhaps I’m being a bit too narrow minded here, but I don’t see how you could create a good shoot ’em up using multitouch/accelerometer. Pressing your finger on someone’s head to shoot them wouldn’t give the same satisfaction.

    On the other hand, the types of games that will show up on the iPhone/iPod Touch have the potential to be quite radical in terms of their control styles and content. I’m sure that game developers will find ways to bring current games to iPhone, as well as create new, interesting kinds of games.

  • brett_x

    I’ve got an issue with just one point of this article..
    “The iPod certainly wasn’t designed to compete as a gaming device, but its latent capacity makes it a viable alternative for the tens of millions of users who already have an iPod and want to use it for new things.”

    Do you really think Apple will just let us update our old iPods to a new firmware that will play games or add other features? Apple is not known for this. They want you to own as many iPods as possible.
    This could change with the iPod touch and possibly future iPods, but it’s always been a safe assumption that you buy the iPod based on its current capabilities. Remember when Apple started games? Only the latest generation would play them, and that hasn’t changed. Apple hasn’t even put the Nike Plus feature on anything but the Nano… which drove me to buy a Nano.. so Apple’s strategy seems to work.

  • jfatz

    brett_X:

    The old iPods are already perfectly capable of playing games and CAN be a viable alternative. What it “wasn’t designed for” and holds it back is pretty much just the control scheme, as the clickwheel does not make for the most convenient and intuitive interface for the vast majority of games that could show up.

    So basically it’s just developer intent, and–in part–people recognizing that the older iPods DO play games. The capability isn’t marketed and there’s little emphasis on it, so it’s mainly there for a few people who feel like pursuing it.

    No firmware update is needed for it; the “capability” is already there. It just needs people to decide they want to make games and other software available for it, which in the light of the iPhone/iPod Touch SDK is unlikely to happen, as they have a MUCH better development platform there.

  • dicklacara

    @sebastianlewis
    The EA quote about losing tactile feedback is not entirely correct. There is an haptic keyboard program for jailbroken phones:

    http://www.tuaw.com/2008/02/26/iphone-haptic-keyboard-prototype-debuts/

  • dicklacara

    @ sebastianlewis

    The EA quote about about giving up tactile feedback wasn’t entirely correct. An haptic keyboard has been written for Jailbroken iPhones:

    http://www.tuaw.com/2008/02/26/iphone-haptic-
    keyboard-prototype-debuts/

    @WholesaleMagic

    One way to aim and shoot would be to use the accelerometers to:

    1) change the users view of the scene– move the target towards the center (crosshairs)

    2) or change the players orientation to the target maybe using a laser beam as a sight

    Then blast away by tapping (anywhere) 1, 2, or both thumbs– giving, at least 3 shooting options.

    Softer/shorter: sounds, flashes and vibrations would give tactile feedback to the act of shooting.

    Louder/longer: sounds, explosions and vibrations would provide tactile feedback to (the degree of) a hit on target.

    When used with the 3-D sound, this could be quite effective.

    I can’t wait for a Wiiremote-style hand-strap accessory for the iPhone.

  • asdrubal

    Nice post indeed. OTOH, I keep pondering if this “migration” from iPods to iPhone/Touch is really going to happen and, if it ever does, if it would be good at all.

    For me, what makes an iPod an iPod is basically the wheel. You take out the wheel and the device turns into just an MP3 player.

    I think the iPhone/Touch don’t have wheels and so for me they are just MP3 players like the rest of the pack, not real iPods. I’m not saying they are not excellent devices, I don’t leave home without my Touch, but they surely are not good MP3 players as an iPod is supposed to be.

    Moving part of the audience to tablet based devices would make a lot of sense, sure. But removing the wheel based devices from the portfolio would not.

    Anyway, that’s just me rambling… :)

  • rludvig

    There are still a couple of things missing on the iPhone in order to compete with other game consoles:
    1. The absence of any controller buttons means that they will have to be implemented using the touch screen, taking up valuable space, since you can’t do everything with the accelerometer.
    2. The multitasking restrictions that Apple wants to impose on the iPhone are probably related to the battery limitations and will definitely affect gaming too.
    3. The absence of mesh network support (a la PSP) is a dealbreaker for all those that want multiplayer games without wifi coverage.

    Otherwise, I think the iPhone will definitely bring some competition to the portable gaming space, given its superior hardware.

    I’m also thinking that after the huge success of the 1st version, Apple will look into diversifying their lineup. I could imagine an iPhone specially modified for games, with a PSP like controller layout. Also a smaller, iPhone nano version, etc. Do you consider writing a piece on this subject, by the way ? I think the diversification of the iPhone would make an interesting subject.

  • Robb

    Dan, I’m a little confused by this article. Nintendo and Sony are the “good guys”, remember? Why would Apple want to compete with them? :-D

  • dicklacara

    @Robb
    Apple and Sony compete all the time (walkman, etc. vs iPod) and cooperate where it serves their interests.

    It’s called a free market, in which competition benefits the consumers and providers, alike.

    Maybe the threat of competition from the iPhone will spur Sony and Nintendo to create the next “great thing” in personal gaming experience!

  • http://forums.gamebunker.com Llydis

    Michael Pachter thinks iPhone consumers are rich, disinterested, hip consumers. While blissfully ignoring the other people who own iPod Touch.

    http://gaygamer.net/2008/03/iphone_makes_me_hip_iphone_mak.html

    I enjoy being rich(debatable), hip(maybe) and disinterested(I guess?) I’d also like to see how the apps will start influencing the idea of what a mobile app is, should be, and will be.

    As for iPhone/iPod Touch as a gaming platform, I’m for it. It’ll be interesting to see how that increases competition in the mobile games arena across the spectrum. If anything it’ll at least bring us up to speed on what Japanese phones have been doing for years.

    I don’t think it’ll take the throne away from Nintendo, they’re doing their own thing and are being rewarded for it with both the Wii and DS(which arguably are hitting the same chords as a typical iPod market.)

    Well that and I’ll probably be getting Spore for just about everything. I’d also like to see EA bring stuff like MySims to the iPhone/iPod Touch.

  • John E

    tons of good info here, but one crucial aspect was not discussed at all: WHO is actually using these mobile gameplayers? Who will want to buy Apple’s? makes a big difference in their sales potential.

    i see mainly pre-teen kids using the Nintendo DS (and Gameboy as the entry level for kindergarten). makes sense since it is the lowest priced. parents buy them for their kids, knowing they may be get busted/lost.

    are parents going to buy these younger kids a Touch (forget iPhone) instead at a significantly higher price? No.

    Sony PSP i see mainly ‘tweens and teens using. then at some point they focus more on serious console gaming. this group also buys tons of iPods.

    will they upgrade to iPod Touch (and the iPhone for the rich kids)? the ones that can afford it might, but not the others. we’ll see …

    the iPhone/Touch instead are really aimed at the 18+ age group for whom an extra $100 – $200 to buy it is not a big deal. college kids of course are a huge market. so big potential sales for Apple there. then gameplaying drops off and changes in taste as ages get older, (i’ve never seen gameplaying charted by age/platform – anyone know a link?) less shooters, more puzzles etc. i would think people over [18? 21? 25? 30?] are much more likely to buy an iPhone/Touch than a PSP for their own use. we’ll see …

    point is, because of the very consequential age differences among the DS, PSP and iPhone/Touch user-driven market segments, Apple really is not competing with those older platforms as much as Dan’s article implies.

    instead, Apple and its game developers are opening up a new and older mobile gaming market segment. similar to the way Nintendo’s Wii found a new console market for adults, including even baby boomers. how that turns out, we’ll see …

  • http://forums.gamebunker.com Llydis

    DS is actually across the spectrum of age because of the amount of titles it offers that don’t really fit anywhere else.

    Case: My sister, who is 35, has never wanted a portable game system before DS. But, she wanted a DS because of the games like Brain Age and Flash Focus.

    There could be an appeal for games like MySims and Spore for iPhone/Touch since they’re simply games you can play for a few minutes, put down, and get back to where you were pretty easily. Obviously not more in depth games like RPGs and the like, but it could be surprising if that does happen.

    The reason Nintendo is successful right now is because they saw that trend and started making games that catered to it, much to the chagrin of people who traditionally play games, that are easy to get into and out of.

    Even their new Mario game fit the model pretty well, even though it’s more in depth than Wii Sports or Big Brain Academy.

  • http://web.mac.com/johnnyapple johnnyapple

    I can’t believe nobody else said this … Like the iPhone itself, the SDK and gaming are, well, a game changer.

    Nice article. I’m not much of a gamer but will almost certainly a few for my iPhone.

  • http://www.marketingtactics.com davebarnes

    Personally, I would think that the worst game console of all time would be: http://en.wikipedia.org/wiki/The_Phantom_(game_system)

  • http://forums.gamebunker.com Llydis

    Which is aptly named.

  • Sai

    @John E

    One thing that most people fail to remember is that the 30+ age group grew up with the original NES in their living rooms. Their used to a games console as part of their normal lives and are far more receptive to using their iPhone or iPod Touch as a games platform. And this includes a wide range of games rather than the brain puzzlers usually relegated to the “old geezers” demographic.

  • Robb

    @dicklacara
    I know, I know… I’m just teasing Dan because we tend to divide the world into “good guys” and “bad guys” with regards to the Mac community. Sony gets to wear the white hat when facing off with Microsoft in the PS vs. Xbox scrap and then switches to a black hat when it’s the Walkman vs. the iPod or Sony Entertainment vs. iTunes.

    My first thought of the iPhone squaring off with the DS and the PSP is that it would be no contest. This is what Nintendo and Sony do for a living and with Apple… games only seem to be (at best) a hobby.

    But the SDK and the prospect of being in on something new and exciting could really be a game changer. Game developers that won’t build for the Mac because of the small gaming population, might jump at the chance to get their game on the iPhone. It almost makes the iPhone (or iPod Touch) a console of the Mac itself, while still being in essence, a Mac.

  • http://www.roughlydrafted.com danieleran

    @ Jfatz:
    Microsoft has dumped ~24 billion into home/consumer electronics, the largest portion of which has gone into gaming initiatives. That includes the money invested, not just the operating loss. It does not have that much to show for its efforts.

    While I noted that the console makers in general relied on software licensing to ‘keep their heads above the water,’ I specifically noted that “Nintendo has also worked to sell its consoles at a profit while also earning software licensing revenues.”

    If you want to talk about sound quality of the iPod vs the DS and PSP, I don’t think you’ll find that the iPod comes up short. Plug some headphones into a $129 DS.

    As for iPod Games: remember that the tremendous acceleration in iPod sales has resulted in the first four generations of iPods being nearly statistically irrelevant to the installed base, particularly when you consider that they last for about 2-3 years.

    That means of the 150 million iPods sold, over 100 million were sold in 2006 and 2007 (!). The G5 iPod started selling in late 2005, and has made up around 50% of sales according to analyst figures. The Video Nano also plays games, meaning that the majority of iPods sold this winter are game-playing. The percentage of iPods that can’t play games is quickly dropping. There is simply no need for Apple to try to figure out how to support gaming on earlier 3G/4G iPod models, which lack the video hardware available in the 5G version (which, incidentally, is why they can’t play videos either).

    Going forward, Apple will continue to sell video iPods that support existing games, but will also be transitioning iPod buyers to the new OS X / Cocoa Touch platform, which already includes 4.5 Million iPhones and likely another 4-6 million iPod Touch. By the end of 2008, the Cocoa Touch platform will likely reach an installed base of ~40 million units (15 million iPhones + 25 million Touch). That’s actually a conservative estimate.

  • jfatz

    @danieleran

    (re: Microsoft and “billions”) – I thought that might be what you were insinuating, at which point I simply disagree with labelling it as “losing tens of billions.” No one talks about startup capital as a “loss” if that investment leads to later profits. (Though they may mention it as a factor to comparing returns.) I don’t really think a statement like “losing tens of billions” in that context without it implying gross profit/loss at the VERY least. (The way most companies list it, usually gross over net, but still dealing with profit/loss, not all the “costs” while ignoring all the revenue.)

    My main point regarding Nintendo is that their “software licensing revenue” is more icing on the cake. It’s not just that they’re not selling their hardware at a notable loss for increased sales like Microsoft and Sony, but the vast majority of software sales comes from sales of their OWN software, not licensing to 3rd parties. MS and Sony each have their own 1st party titles (and you can count 2nd party titles, I guess, since they publish a lot more than they internally develop)–some of them excellent performers–but the comparison to Nintendo is almost irrelevant. Nintendo made almost as much profit on the Gamecube as Sony did on the PS2 (last time I ran the numbers, at least. The PS2 is still pulling in revenue), and the Gamecube was NOTORIOUSLY panned by 3rd party developers. It was all their own games on their own platform, to less than 1/5th the installed base.

    As well, I wasn’t thinking any of the three would necessarily come up notably short in regards to speakers/sound/headphones; I just think it’s a good thing to compare on a meaty spec breakdown.

    I wish I had more time to go into the “analysis” and “conjecture” post I wanted to make before, but I’m waiting on someone to go on an emergency call to Boston. No time to write all that up now. *sigh*

    I wish I had an iPhone, so I could do it at the hotel! ;-)

  • Argosy

    Daniel,

    I frequent your site often and love reading your well thought out pieces.

    One thought I had about game control, I’m sure using the Home button for game control will not be allowed by Apple ( for obvious UI reasons) but no one has mentioned anything about the answer/end call button on the iPhone headphones. Do you suppose this could be in orporated as a game input device (as a “fire” button)? Unfortunately, I don’t think Otis included on the Touch’s headphones. Anyway, something to hunk about.

  • Argosy

    Let’s see my above post should read:

    …One thought I had about game control. I’m sure using the Home button for game control will not be allowed by Apple (for obvious UI reasons “Home” should always mean HOME) but no one has mentioned anything about the answer/end call button on the iPhone headphones. Do you suppose this could be incorporated as a game input device (for instance, a “fire” button)? Unfortunately, I don’t think this is included on the Touch’s headphones. Anyway, something to think about.

  • John E

    In standard accounting, R&D expenditures on any product are “amortized” in installments as annual expenses over a period of years that is supposed to correspond to the lifetime of the product. just like a capital expenditure in buying physical equipment or property is depreciated gradually over its useful lifetime.

    so both Apple and MS ultimately do count all their R&D costs on a product as expenses that reduce net profit, just not all at once in a single year.

    for consumer tech products, i’d have to think 5 years is about the limit for amortizing R&D.

    but corporate tax accounting is much more convoluted. there are so many tricks in that game for R&D that you need a specialist to figure it out. all meant of course to avoid paying tax. and there might even be credits! if they come out ahead tax wise writing all the cost off in one year, that’s what they’ll do.

  • Cataclysm

    This is the worst article I have seen on this site (which is beginning to make me question the validity of the other articles).

    The article makes the standard errors of game analysis: focusing on hardware, not focusing on users, putting in the stock narratives of ‘1983 Crash’, Nintendo’s ‘control’ during the NES days (for crying out loud, that is over two decades ago), and so on. Daniel doesn’t usually talk about gaming so the standard errors are pretty typical and can be forgiven.

    Gaming is not in the technology business. It is in the entertainment business. Technology isn’t going to mean a hill of beans. People play ‘games’. They do not play ‘architecture’.

    Games on ipods have always been a joke in the Gaming Industry. The biggest problem is the interface (which creates poor experiences). The $5 software is not attractive to third parties. It is difficult enough to gain profit from handheld gaming. There is a reason why there is only a like a dozen games available for the ipod despite its user base.

    In order to win in an entertainment business (which is what gaming is), you must create superior customer experiences. How in the world can a phone create a better gaming experience than hardware designed around games? It simply can’t. The games will always feel a little clunky. No one is going to buy an iphone for games.

    I don’t think Daniel realizes why Apple’s business model will bar them from making any inroads into gaming (aside from the obvious ones above such as the hardware not being designed for gaming). Game machines attract third parties by its user base. Developing a game is extremely more difficult than developing other software (why? because games are in the entertainment business which is far tougher to crack as it is based entirely on user emotion, not utilization.). Game software also requires top notch controls and presentation (far beyond other software). This requires talent and money to be invested. Why on earth would any company invest that for a $5 game for a platform that wasn’t bought for gaming?

    There will be a few ‘token’ games out for the iphone. But the reality is that the only real companies who will put games out for it are those who cannot compete on the dedicated game machines. And the companies who cannot compete or have the money to make standard games on the dedicated machines are being snapped up by WiiWare, PSN, and XboxLive Arcade.

    “Further, because Apple is attaching game development as a sidecar dessert on top of a device that is primarily monetized as a hardware sale (boosted by retail and accessory sales, media sales, and carrier revenue sharing), developers will get more bang from their buck and will incur less risk developing games for the iPhone.”

    Wrong. It is more risky. Developing games for the DS and you are competing with just other DS games. For the Iphone, which people don’t buy for a game platform anyway, the limited entertainment dollars are being competed with music, movies, and other applications.

    The purpose of iphone games is not to ‘rival’ Nintendo or Sony but to give additional value to the iphone. In the same way, the Weather Channel for Wii is not to rival weather news but to give additional value to Wii.

    Both Nintendo and Apple adopt the Blue Ocean Strategy.

    In order to go anywhere in the game industry, you must have an integrated hardware and software dedicated for gaming. Apple’s iphone is integrated but was not built for gaming. Apple also lacks first party studios to create the game software to drive adoption.

  • http://www.roughlydrafted.com danieleran

    Interestingly, Microsoft splits out major R&D, advertising and monopoly payments into its Other category, so the massive losses the company has suffered in its consumer products division only relate to hardware failures.

    Also, FYI, the “second party” is you the buyer, so “second party software” would be software you write yourself. The first party is the original seller and third parties are those that are outside the buyer and seller.

  • http://www.roughlydrafted.com danieleran

    @ catacylsm: Please site the problems you suffered in reading the article. The licensing business model of Nintendo vs Atari is relevant, and interesting because Apple is doing something that is somewhere in between: restricting development like Nintendo, but leaving the market more open like Atari. That is something new and noteworthy; Sony and Microsoft only copied Nintendo, and have done a poor job of doing anything other than gaining market share at the expense of profits.

    Gaming is indeed a tech business, but as I pointed out, Nintendo has proven to be quite successful in delivering playability vs high tech. The only major misstep was the GameCube, which was too limited in gaming content for buyers to like. Every other Nintendo console has similarly been nothing exceptional compared to rivals, but has still done fairly well, or in the case of handhelds, exceptionally well.

    iPod Games are not a joke in the industry. They are a free add-on that is making Apple and 3rd parties enough money–even at $5 each–to result in continued expansion of the program. There are regular new games being rolled out by significant developers: EA, Sega, etc. Do you think Apple is losing money hand over fist from its gaming program like Microsoft? If so, you’re wrong.

    You puff a lot about how nobody will be interested in iPhone games. Clearly, you are wrong. If there was no interest, there wouldn’t be a long list of interested parties getting started. EA wouldn’t be describing the unit as a breakthrough in mobile gaming.

    You compare the iPhone to Wii/PS3/XBL gaming. Why? That business is irrelevant to mobile gaming. There are millions of people buying iPhones and iPod touch units, and those people are a key market of people who pay for what they want. There will be virtually no piracy. The result: a living room console-type market paired with the future of highly mobile users.

    Ask a few analysts about the future of smartphones and see if they think there’s any growth potential.

    Seriously, do you really think that games developers will shun the iPhone because users are drawn to it for its media playback and other features?

    Apple is a first party studio, and has commissioned a variety of games. It demonstrated its own iPhone game. There’s simply no comparison between games for the iPhone and games for other mobile platforms, or even the handheld consoles. Even more importantly, there’s a market for iPhone games, something that doesn’t exist for other smartphone platforms.

    You are awfully dismissive of my comments, but they are really rather uncontroversial and obvious. Revisit this toward the end of the year and see if your mind changes.

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  • http://demaagd.com Jeff56

    Nintendo Gamecube isn’t Nintendo’s only mistake. N64 didn’t do a whole lot better, and the Virtual Boy sold a tiny percent compared to those two systems.

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  • http://forums.gamebunker.com Llydis

    It’s hard for a lot of people who play games to fathom the idea of gaming platforms or genres that don’t cater to their demands.

    Nintendo has taken a lot of heat for their strategy in making games that appeal to the broad spectrum of… um… humanity while seemingly ignoring, to the players, the people who can sit for hours at a time with a game.

    It’s weird, video game players want their hobby to be seen as normal but want to exclude everyone else when their esoteric niche is being threatened by girls or other social cliques you’re supposed to grow out of after high school.

    (For the life of me, I could never understand why Penny Arcade seems upset with the concept of Spore.)

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