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Nintendo readies console counterpunch

Launching its GameCube just days after Microsoft's Xbox debut, the company is counting on Pokemon, Mario and the Peter Pan factor.

As Yogi Berra said, it's deja vu all over again: On Sunday, Nintendo launches its GameCube, a mere three days after Microsoft entered the video game market with its Xbox console.

see special report: Microsoft plays for keeps While analysts and other observers have expressed surprise at the proximity of the two product launches--both delayed from earlier plans that would have given Nintendo a brief head start--they don't expect the timing to hurt Nintendo's reception.

Thanks to unusually strong brand loyalty, savvy marketing and a price tag $100 lower than competing machines, Nintendo loyalists should have no problem ignoring the Xbox noise as they wait to get their hands on a GameCube, analysts say.

"I think the dates were just coincidental," said Schelley Olhava, games analyst for researcher IDC. "They really shouldn't affect each other. It's two different products, two different price points, two different types of consumer."

Added George Harrison, vice president of marketing for Nintendo of America: "This is the start of a marathon. A two- or three-day difference isn't going to make a difference."

One thing both companies will be looking for is strong sales through the holiday shopping season, just getting under way. Microsoft starts the race as something of an underdog, but it has a healthy supply of marketing dollars and a demonstrated hunger for success. And both are going up against Sony, the leader in the field with its year-old PlayStation 2.

All three companies are angling for the prize in a field that's growing by leaps and bounds. Market research firm Gartner expects shipments of game consoles to jump nearly 41 percent worldwide next year.

Nintendo has at its disposal some of the strongest franchises in the game business, including Pokemon and the ongoing series of games featuring super-plumber Mario. Mario's brother, Luigi, will star in one of the initial titles for GameCube.

"There's something about Nintendo's games that is just magical," Olhava said. "A lot of it is their characters and franchises."

Those characters have helped Nintendo maintain leadership with younger game players, a lucrative but finicky segment of the game market.

"They're going after the kiddie market, which is really different than what the Xbox is after," said Gartner analyst P.J. McNealy.

Added Trip Hawkins, CEO of games publisher 3DO, "GameCube is really going to crank up the kids market again, which has been kind of dormant."

The Peter Pan factor
Nintendo also has something of a Peter Pan factor--players who get attached to the games as children often remain loyal to the brand as grown-ups, creating something of a cult following nourished by sites such as Nintendorks. For evidence, Nintendo had customers happily eating cat food and bugs earlier this month for a chance to win a GameCube.

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  Nintendo takes on Xbox
Perrin Kaplan, VP, Nintendo
October 1, 2001
"There's a lot of kid appeal in Nintendo products, but they also have a lot of teenagers and young adults," Olhava said. "They have this loyal audience that's stayed with Nintendo ever since they got into gaming."

It also won't hurt that at $199, the GameCube will cost $100 less than Xbox or Sony's PlayStation 2.

"Nintendo markets to kids and does quite well at that," McNealy said, "but it's the parents who shell out the money. They see it's $100 less, and that's just going to help reinforce their decision."

Nintendo's Harrison said the price could be an even more important factor in a down economy. "Consumers aren't going to buy a system just because it's cheaper," he said, "but I think in these economic times, it plays to our advantage."

One of the biggest sticking points for Nintendo--and its November rival--may be supply. The Japanese company has promised to have 700,000 GameCubes available Sunday and another 400,000 by the end of December for a total of 1.1 million. Microsoft has made similar promises to ship 1 million to 1.5 million Xbox units by the end of the year.

That's unlikely to be enough to satisfy holiday demand, however, and empty shelves could push buyers toward Sony, which is expected to keep its sales lead with ample supplies of the PlayStation 2 this year.

Gordon Haddrell, owner of the Gamers Edge store in rural British Columbia, expects Sony to come out on top through the holidays. "Average consumers, when faced with confusion, will always go with what they know: the PS2," he said. "People do not like to take risks, especially on pricey toys that may not deliver what they expect."

Haddrell added that he expects sales of "Metal Gear Solid 2," a highly anticipated new action game for PlayStation 2, to dwarf game sales for both of the new consoles during the holiday season.

Harrison, however, is convinced consumers will wait--if they have to--for Nintendo products.

"If we've done our job, they're not going to go into a store and casually change their mind and buy a competing product," the Nintendo executive said. "Our whole marketing effort has been aimed at making sure people wake up in January and say, 'I know I bought the best game system.'"

McNealy concurred: "People will be patient if their kids have really been clear they want a GameCube."