Apple + Nintendo =
Warning: This is going to be longer than the usual post with less focus on finance and more on business development.
In January of 2015, while working for a small private banking office, we were looking for alternatives to divest away from oil related stocks. While looking at Japan’s industrial and tech sector, a gaming company called Nintendo caught my eye. I couldn’t stop recommending it. In March of 2015
, during their shareholder’s summit, the stock shot up after announcing a pivot to mobile gaming. The stock went up again a year later after releasing their mobile game: Pokemon Go.
On the other side of the Pacific, Apple ($AAPL) was the go to safe investment and the innovative company changing the smartphone landscape. It was the leading driver of the S&P (despite Bernanke’s taper tantrum back then driving the stock market down).
But what do these two companies have in common and can a collaboration between the two be lucrative in the long run?
Nintendo is coming out of its turtle shell
During the early 2000s, Nintendo was making a lot of money for launching a console called the Wii. They were the titans of the industry and its stock market reached new highs. Then things started to disintegrate with the arrival of smartphones and mobile games.
After 2015, everything has changed for Nintendo. The 2nd longest serving president of the company, Satoru Iwata passed away that year but left an important road map for the firm: to expand beyond their comfort zone.
A company known at being conservative and slow at reacting to market trends, they pivoted and decided to push into 3 new sales area: IP licensing, merchandising, mobile game development. In terms of IP licensing, I’m sure you have heard of the upcoming release of the Mario Movie.
Unlike the last movie disaster from the 90s which was only funded for tax avoidance purposes, this one has high expectations for it, financially and critically:
Then the company started to build theme parks in Japan and the USA and opened new stores worldwide (including Israel) to sell merchandise.
Then the creator of Super Mario showed up unexpectedly at an Apple Event to present a new Mario mobile game.
Nintendo was known in pursuing a blue ocean strategy
Apple losing its bite
A lot can be written about Apple and their impact in the smartphone and mobile application landscape. Not only that, they redesigned the whole landscape with copycats in all aspects: for e.g. every bloody tech company is now imitating the Steve Job’s style presentation and it’s getting tiring.
Apple has been innovating and creating a new line up of products non-stop since 2001, when Steve Jobs came back in 1997. Even after his unfortunate passing, Tim Cook continued the legacy. Sales for hardware and software were going through the roof.
But in 2018, when Apple announced they would stop reporting unit sales
, investors got the jitters. Have we reached peak demand?After that, the company has been releasing the same products but with a +1 model number.
Peer pressure from the board and shareholders made them dwell into strange new territory: Virtual Reality headsets and Electric self-driving cars. They too were also following market trends. And these products have yet to be released.
The share price of AAPL 0.00 continued to grow despite all that.
It broke records becoming the 1st US company to reach $3 trillion (now $2.2 trillion)
But there is still hope for the future:
They are entering a new space with banking with Apple Pay and Buy Now Pay Later service. They are even allowing to receive contactless payments on their phones which would be perfect for the small merchants and retailers.
Apple unveils contactless payments via Tap to Pay on iPhone - Apple
They have also started to compete with Microsoft and Intel by going back to their Personal Computer roots: they launched their own Apple Silicon microchip. Even Google threw in the towel at making their own PCs and Laptops
. This is an area to watch for, the Apple Office sector.
Possible Collaboration
Funnily enough, Apple started with both founders Jobs and Wozniack building the game “Breakout” for Atari
.
Like Nintendo, they managed to code it simply using as little hardware as possible (which manufacturers couldn’t replicate).
This was also how Satoru Iwata became president of Nintendo. In the 90s, he managed to solve a software problem for a Pokemon game despite hardware limitations.
This is the core philosophy to both companies: simple yet refined and elegant coding.
They have too much in common: both are protective and secretive of their brands & IPs, they have a known brand with a huge loyal and dedicated fan base. They have a simple UI/UX that is family friendly to users of all ages. They have family monitoring features. They both have their own avatars (Mii & Memoji). They have crazy amounts of cash accumulated on their balance sheets (~$8b vs $30 billion). They also have crazy amounts of patents.
So where can they collaborate:
a- Nintendo can use the Apple Silicon chips to build their next consoles instead of Intel or AMD
b- Apple can introduce Nintendo games exclusively to the Apple Arcade service (especially the old catalogue of games)
c- They can create a kid friendly phone/gaming hardware
d- If Apple is adamant in releasing a VR headset, they can go even further and release AR glasses. As per the headline below, imagine re-enactments of Medieval Castle sieges in Ajloun or Shobak. Participants can wear Nintendo gloves and Apple glasses. They can shoot virtual arrows or swing virtual swords and through their patented HD rumble feature, you could feel every attack.
Nintendo is 133 years old, Apple is 46. From the look of things, they might last till the end of the century.
I am sure a term will coined for their collaboration: Ando’s or Nip… (no wait).
https://www.businessinsider.com/nintendo-is-spiking-again-2015-3
https://www.blueoceanstrategy.com/what-is-blue-ocean-strategy/
https://www.businessinsider.com/apple-will-no-longer-report-iphone-sales-unit-numbers-2018-11
https://www.droid-life.com/2022/09/12/a-new-pixelbook-was-coming-and-then-google-cancelled-it/
https://www.gameinformer.com/b/features/archive/2015/10/09/how-steve-wozniak-s-breakout-defined-apple-s-future.aspx