Nintendo on the latest 'technical divide'

At the same time, on the most granular level, I wonder if a similar technical divide exists inside your own home. One person is probably expected to provide solutions when it's time to install the wireless network, redirect the satellite dish, or retrieve a lost document. The have-nots sit and wait.

Several years ago, we noticed this same kind of dichotomy beginning to separate active core consumers from potential consumers in my own industry, video game entertainment. While ardent players reliably responded to ever-advancing technology and complexity, those same attributes consistently chipped off potential new players from the total market, narrowing the consumers into a smaller niche.

For the frustrated, it simply wasn't worth the investment of time or money in the midst of a life ever-busier with work, family and other obligations. The players happily jousting inside the castle walls didn't see the moat outside widening.

For us, this raised two fundamental challenges that I believe now, or someday soon, will confront almost every consumer-facing technology business. First, how do you satisfy the core while still expanding appeal? And second, how do you leverage your strengths against entirely untapped audiences--to the so-called "blue oceans" in popular marketing speak?

The snap answer is obvious--"innovate!" It's a popular prescription, but not a simple one to follow. Harvard professor Clayton Christensen outlines one distinct course of action for innovation: Provide a new product that actually underperforms on an established industry metric for "progress," and substitute an alternative that typically is smaller, less expensive and easier to use.

Initially, the "core" of any industry will scoff. But if the product is right, enough new users will be attracted to form an alternative definition for progress. Toyota is performing this juggling act right now, touting world-class hybrid technology with the Prius, while simultaneously offering traditional horsepower and towing capacity to new pickup truck buyers.

But technology companies may not have the luxury of expanding product lines to address both audiences. I would suggest that for them, "smaller/cheaper/easier" is a far more likely road to riches, while "more of the same" eventually proves to be a dead-end street. It doesn't mean innovation stops--just that innovation turns to ideas like simple user interface and interactive experience rather than faster system speeds and feeds. The next generation of R&D should balance what's under the hood with what users want to hold in their hands.

A recent McKinsey study looks at this a different way. It claims there may be a middle ground--one reaching new customers and building new revenue streams without abandoning key products or core competencies. It describes "white spaces," or markets that exist (perhaps unrecognized) between typical product categories. They "fuse consumer benefits" by combining "brands, technological breakthroughs or insights" in new ways. A decidedly non-technical example is the repurposing of traditional breakfast cereal into the "breakfast bar." The result? A new, highly profitable category--"on-the-go nutrition."

A couple of years ago, we at Nintendo began to telegraph the nature of our new game console, the Wii, in terms identified by professor Christensen: "smaller, less expensive, easier to use." It is purposely so simple and intuitive that anyone in a household can use it. It also incorporates functions like a photo browser, an Internet browser, and custom news and weather channels, which lead some people to wonder what these elements have to do with video games. In fact, this is a conscious move into "white space"--in this case, that sizable gap between technophiles and technophobes where consumers just want an understandable way to catch up with the times.

These days, any forward-thinking company will consider tools like MySpace. But it may be equally vital to search for potential consumers lurking in the "white spaces."