in the game development and publishing community that Nintendo is currently showing early presentations of its next home console hardware. Apparently set to hit the market “by 2011” the new device is said to be the true “next generation” Nintendo console, and far more than a simple refresh of the current hardware. Unlike previous console transitions from Nintendo, the new system will be presented as a true successor to the Wii, and is being dubbed by those that have seen the presentation as “Wii HD.” There is no indication if this will be its eventual name, but the nature of the transition has been characterized as similar to “the shift from Game Boy to Game Boy Advance,” where familiar, key elements were left intact while the core hardware was made more powerful. It is expected by all those that we have spoken to on the subject that the new device will retain the Wii name in part.
While my sources are reluctant to be too specific about “Wii HD,” they have been able to divulge some (albeit predictable) generalizations. High definition visuals are assured, as is a greater emphasis on digitally distributed and backwardly compatible content, indicating that the new system will feature some form of local storage medium such as a hard drive or large flash memory solution. It has also been indicated that Nintendo’s emphasis is again on what the consumer will hold in their hands and interact with, rather than the “console” itself.
Nintendo has proven it can be extremely successful by leveraging processor technology that is not on the bleeding edge, and be more profitable and more innovative as a result. In a 2006 interview with Business Week, Nintendo visionary Shigeru Miyamoto stated, “The consensus [at Nintendo] was that power isn't everything for a console. Too many powerful consoles can't coexist. It's like having only ferocious dinosaurs. They might fight and hasten their own extinction.” Based on our conversations about “Wii HD” this attitude would seem to still prevail.
But why should you believe this? Everything stated so far could easily have been the result of educated guesswork or speculation. While a Nintendo representative provided the expected response that, “Nintendo does not comment on speculation or rumor,” there is additional evidence, outside this commentary, to suggest that something is going on.
In 2003, Nintendo declared that $34 million was spent on R&D. This figure steadily climbed to $103 million in 2006 and the following year bumped dramatically to $370 million.
Based on figures from Nintendo’s annual financial reports, the company is currently spending more than ten times as much on research and development as it was five years ago, and since the Wii was launched in 2006, R&D spending has more than tripled. While this could be attributed to any number of additional projects, the level of spending suggests that a large project is in the works. In 2003, Nintendo declared that $34 million was spent on R&D. This figure steadily climbed to $103 million in 2006 (the year that the Wii launched) and the following year bumped dramatically to $370 million. When asked to explain the escalated spending, Nintendo representatives were unable to provide comment.
The current Wii hardware is based upon processors and graphics technology supplied by IBM and AMD. These two companies have a joint development agreement together, which is described by AMD as being focused “on delivering a range of integrated platforms to serve key markets, including … gaming and media computing.”
The joint development agreement between IBM and AMD expires on December 31, 2011 but “may be extended further by the mutual agreement of the parties.” This suggests that Nintendo will be leveraging research and development from the partnership in time to ensure that it’s new hardware will be compatible with the Wii’s current “Hollywood” and “Broadway” processors. As Microsoft learned in the transition from Xbox to Xbox 360, switching hardware vendors can make running older games on a new system a much more difficult proposition.
The dramatic bump in spending at Nintendo may also be reflective of Nintendo’s work on a rumored new DS, said to feature a camera and music player. Iterating on the DS in 2009 would certainly shake up the market, though given the incredible monthly sales of the device it hardly needs reinvigorating for the time being. When the Nintendo DS was launched in 2004, the worldwide installed base of the Game Boy Advance was 53 million (on top of the Game Boy’s incredibly huge 118 million.) So far, 80 million Nintendo DS units have been sold worldwide, and demand shows no sign of slowing.
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