Wii Will Rock You: How Nintendo Beat Sony

Fortune magazine's cover story for the Asian edition highlights how Nintendo's new entry level gaming system Wii is whupping the tar out of gaming industry heavyweights Sony Playstation and Microsoft Xbox.

"The answer has something to do with reinvention... Nintendo has shown a knack for leapfrogging its industry.  The company rarely fails to surprise. And if the Wii shortage demonstrates anything, it's that this time, in changing perceptions of gaming, Nintendo has surprised even itself."

How did Nintendo do it?

• Nintendo made games more accessible to non-gamers
• Nintendo created a new economic model where consoles and software titles are more profitable
• Nintendo did not incrementally improve games by making better graphics, as do its competitors
• Instead, Nintendo offered lower quality graphics, but superior interaction through a $2.50 analog motion-detector chip

And, strangely, Nintendo's CEO Satoru Iwata told the world that competitive disruption was what he planned to do long before the product was released. Of course, few believed such a strategy would work.

That is the beauty of a disruptive strategy:

• Customers love you
• Competitors ignore you
• You make money immediately
• Imitators seldom cause serious competition

**Does this apply elsewhere department?**

• Could a telephone company offering a me-too television service apply some disruptive lessons from Nintendo?
• Could new cellular network operators inject a level of disruption to be more effective competitors?

**Blast from the past**
We ran a guest post by software industry exec Zack Urlocker that predicted the success of the Wii last year.

Business 2.0  in April showed why Wii is creaming the competition. Nintendo "zeroed in on two troubling trends: As young consumers started careers and families, they gradually cut back on game time. And as consoles became more powerful, making games for them got more expensive."

**Other sources**

BagleTurf has a chart that shows the steep sales climb of Wii vs PS3 and Xbox 360.