Yves MakhoulNintendo and Microsoft, on top
December 10th 2008 05:40
In an age when Nintendo might as well be printing its own money, it's hard to believe they once considered selling up.
Eons ago now, Microsoft tried to enter the video game industry by buying Nintendo out. The American software maker asked the Japanese video game giant to quit working on the Nintendo Gamecube and to focus completely on the their new project, the Xbox.
How much did they offer Nintendo? USD$25 billion. Minoru Arakawa, the then NOA president said that Nintendo "weren't sure what to think when Microsoft made the offer. I was surprised, we didn't need the money. I thought it was a joke."
Many publications claim that Nintendo simply wasn't interested. That's not true. In fact discussions continued and about six or seven meetings took place during the winter of 2000. Why didn't it happen? Hiroshi Yamauchi, the notoriously quotable ex-Nintendo of Japan president didn't like the idea. Arakawa said "...it became clear that our objectives and their objectives were not the same", so Yamauchi pulled the plug and by January 2000 the talks were over.
Nintendo went on to release the moderately successful Gamecube and Microsoft went on to release the more successful Xbox. However Nintendo still profited, Microsoft did not. In fact, Microsoft still to this day has yet to make a profit out of their Xbox line of consoles, yet Nintendo has consistently managed, even during the dark days of the Gamecube, to make more than enough to feed it's future.
Of course had Microsoft bought Nintendo, the Wii and the DS would have never been created and a new market for the industry would have remained untapped.
At last count Nintendo was Japan's second richest company, only behind Toyota and in front of Cannon. Since the introduction of DS and the Wii, Nintendo shares have soured. The Big N's market value was 8.39 trillion yen (USD $73.03 billion) before the recession (which, as with all recessions, will pass). Given this market value, we can say Nintendo made the right decision in skipping the $25 billion offer.
Microsoft initially publicly degraded Nintendo and it's fans when first entering the video game industry, but in more recent days has conceded that their console can't compete with the Wii. In an interview at the beginning of this year, then Microsoft VP Peter Moore had this to say regarding the PS3's price tag and their thoughts on the Wii/Xbox relationship: "Tell me why you would buy a $600 PS3. People are going to buy two (machines.) They're going to buy an Xbox and they're going to buy a Wii... for the price of one PS3."
The latest feat for the Wii in it's homeland of Japan is reaching the 7 million mark. Enterbrain says as of the 23rd of November, the system has sold 7,024,239 units. On top of that, Nintendo sold 800,000 Wiis Post Thanksgiving in the US and President Iwata announced the economic slump will not affect video games. The company is healthy. Very healthy.
Initially Microsoft tried to buy Nintendo out. Then last generation they tried to undermine the company vying for victory in the console war. This generation however, Microsoft is instead taking on an old adage -- if you can't beat 'em, join 'em. And at least publicly, they have.
Sales results: Nintendo sold 981,000 Wiis in November in the US while Microsoft sold a solid 770,000 Xbox 360s. Sony in third with 466,000 PlayStation 3s.
Perhaps Microsoft's tactic is working.
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