Should Sony And Nintendo Worry About Apple, Now?

I've long been in the camp that doesn't believe the iPhone platform is a threat to Sony or Nintendo.  I'm a little less so now but there have been moves by Apple in recent months to position the iPod Touch as a gaming machine in addition to being a great iPod.

Here's the number to consider:  37 million iPhones and iPod Touches sold through the latest quarter.  And the momentum is set to increase as Apple is due to release their next iPhone, iPod Touches selling better than expected, and over 9,000 games in the iTunes App Store.  Oh, did I mention how easy it is to download a game?  Any game?

At last count, PSP stands at 50 million while DS is at 100 million units sold.  Granted that DS and PSP has about three years' head start on Apple, we also have to be mindful of that fact.  PSP and DS are dated technology as far as gaming goes.  We can pretty much be sure that Apple will refresh its hardware on an annual basis.  

Those are just the facts that I want to point out before going further.  So, let's ask again:  should Sony And Nintendo Worry About Apple, Now?

Well, they definitely have to keep an eye on Apple.  And once DS2 and PSP2 comes out and Apple continues to hold its own, then they need to worry big time.  At issue isn't just gaming but what these gaming handhelds are capable of achieving.  Let's examine each issue that Apple has done right to make the iPod Touches and iPhones potential gaming competitors to the DS and PSP:

• iTunes App Store.  Just about everyone's making one.  And in a few months, we'll know where things stand for RIM and Android since they've got the only viable operating stores for their platforms.  In about a year, we'll see Microsoft and others join the party.  But I have a feeling things won't be as rosy as iTunes.  Sony and Nintendo will have to take a hard look at how their handhelds and games ecosystem best fit their fans.  I've got a lot of confidence in Nintendo to innovate but over the years Sony has failed to challenge Apple in media and hardware design, particularly with their unfocused attempts at dethroning the iPods.
• Ease of creating apps.  35K Apps as of today.  Over 9K are games.  In about six months, I can see that number move up to 15K.  One of the biggest complaints developers have about developing for the PS3 is how difficult and cumbersome it is.  Nintendo and Sony would have to match the support, tools, and appeal that developing for the iPhone has.  Here's one thing they can start from the beginning:  learn from Apple's insane-make-no-sense approval process.  That'll go a long way in making developers feel secured.  And as it traditional in the gaming industry, Nintendo and, in particular, Sony will need to secure exclusive titles.  Mario and company will need to really step it up.
• Multimedia functions.  Forget about out-mp3ing the iPod function.  However, they will need their own libraries of music and video.  

Here's what Sony and Nintendo has to focus when Apple becomes a real threat:

• Go where Apple won't go.  You've got buttons.  Use them in ways that Apple can't.
• When the new systems come out.  When your app store start chugging along, stop playing defense.  Nintendo will do whatever it wants.  I love that fact.  Sony will be tempted to react.  It needs to make Apple and Nintendo react for once.  
• Add ebook and TV functions to the systems.  
• Add wireless connection.  I'm not just talking about Wi-Fi.  Change hthe dynamics of mobile communication and gaming are today.  With rumors swirling about Apple's iPhone-less device for Verizon, this is something that Sony can excel at as well.  A gaming device with always on connection to the Internet and the Sony gaming network will go a long way in getting gamers hooked.  
• Leverage the Mii and Playstation networks.  What's Apple got?  MobileMe?  Right...

In examining Apple's advantages and how Sony and Nintendo can continue to put distance between their respective gaming handhelds from Apple's mobile devices, we can sort of see the different visions each company sees for mobile gaming in the future.  Each will leverage its own technology and properties neither the other two cannot duplicate.  

At the end of the day, there is likely going to be little change in the mobile gaming industry even if Apple manage to insert itself as the third wheel in the market.  Apple is about selling hardwares.  Nintendo will try to appeal to a larger gaming audience.  Sony will like fits somewhere in the middle.  

Perhaps not in a year or two.  But somewhere down the line, Apple's gaming potential will need to be taken seriously.  By the end of the year, the number of Apple mobile devices may well reach 60-70 million.  The next billionth app downloaded isn't going to take 10 months.