Microsoft's recent announcement that it would offer the Xbox Oneseemed directly aimed at becoming more cost-competitive with Sony. But it could have implications for Nintendo as well.
The holistic connotation of the Xbox One's name came from the notion that it would be a product that could provide access to virtually all TV-based entertainment . Of course, it could handle cutting-edge video games (from discs or downloads) and broadband entertainment and apps. But via an HDMI input, it had at least a tentative grasp on that elusive prize of TV add-on boxes: the pay TV lineup most Americans already get via a cable company or direct competitor.
It would conjure all this content in response to your voice or a wave of your hand. Even if you didn't care much about video games, being able to call up "The Big Bang Theory" by speaking the show name had a futuristic aura that would earn the approval of the show's geeky principal characters (although surely Sheldon Cooper would think he could design something better).
But in product design, no capability comes without cost. In the case of Xbox One, the inspired input had a real financial one via a new version of Kinect that boasted enhanced capabilities over its Xbox 360. The $100 premium that Kinect forced versus its primary competitor, the PlayStation 4, helped Sony get a crucial early lead in hardware that could spiral into harmful developer skepticism.
Microsoft still has ground to make up and possible developer expectations to temper; it had justified Kinect's inclusion as an integrated part of the offering. Might another challenged eighth-generation console from Nintendo pull a "U-too" and separate the Wii U's expensive GamePad the way Microsoft has pulled out Kinect?
To do so, Nintendo would have to make changes to both the Wii U's operation, which assumes the GamePad and its positioning versus its predecessor. Despite the loss of Kinect's in-box capabilities, the Xbox One still has much going to distinguish it from its lower-priced predecessor, such as the ability to run the most graphically demanding console games and its TV passthrough. Even if the latter is diminished by not having Kinect, the possibility of adding it later has at least some value.
But Nintendo has struggled to differentiate the Wii U from the Wii, with the GamePad being by far the most significant hardware difference. And yet, paradoxically, game developers' embrace of it has been far from universal. Take Mario Kart 8, a hallmark title from Nintendo itself that virtually ignores the GamePad. Currently, a replacement GamePad costs $150. Assuming that price held true for it as a retail accessory, and given its adoption, most future Wii U buyers would probably pass on it.
That said, it would be better to have more Wii U buyers without the GamePad than fewer Wii U buyers with it. With Nintendo passing on a new home console at this E3, it will have to live with the Wii I for another year. Cutting the GamePad may not allow it to take the volume prize, but it might allow it to cut its losses until it delivers its next generation.