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Wii U is not a 'next generation' console, analyst says

Nintendo's upcoming game console might replace a current-generation console, but Wedbush analyst Michael Pachter doesn't believe its next console is truly "next generation."

Is the Wii U a 'next-generation' console?
Is the Wii U a 'next-generation' console? CNET TV

Nintendo's upcoming game console, the Wii U, is not really a "next-generation" platform, Wedbush analyst Michael Pachter said in an interview published yesterday with Industry Gamers.

"The Wii U is a pretty ambitious undertaking," Pachter told Industry Gamers. "It's a new console, with new controls and architecture, but it's not quite 'next' generation. Developers have to contend with differences between the Wii U and current generation consoles, then have to figure out what to do with the controls."

According to Pachter, the Wii U will be home to "no significant third-party 'exclusives,'" and instead, will simply get games from developers that are ported from the Xbox 360 and PlayStation 3.

Nintendo's decision to release a new console next year is somewhat of a surprise, since the company's competitors are reportedly not planning to release new hardware until 2014--when, some believe, the true "next generation" will begin.

The issue for Nintendo is that the company's current-generation device, the Wii, is behind the curve. Although the console has sold extremely well over the years, it lacks HD graphics and the graphical sophistication to compete visually with the Xbox 360 and PlayStation 3. With the Wii U, Nintendo is addressing that problem with HD graphics and better internal components, but there is some fear that the device's visuals will only match those of the consoles already on the market.

That said, Nintendo has little choice but to release the Wii U as soon as possible. The Wii is suffering from slow sales as both the Xbox 360 and PlayStation 3 rally. Just yesterday, Pachter reported in a note to investors that Xbox 360 sales in the U.S. last month likely hit 360,000 units. PlayStation 3 sales are estimated at 260,000 units. The Wii, Pachter says, only tallied 190,000 unit sales.

That disappointing performance is nothing new. In January, Nintendo announced that it had sold over 7 million Wii units in the U.S. last year, making it the third-consecutive year it reached that milestone. The only issue is, in 2008, the company sold over 10 million Wii units, and over 9 million Wii units in 2009. Based on NPD sales figures so far this year, it appears year-over-year Wii sales are once again going to be down by the end of 2011.

That decline, in addition to poor sales of its 3DS portable, pushed Nintendo into the red during the second quarter of 2011. During the period, the company announced in July, it lost a whopping $328.3 million as revenue plummeted more than 50 percent year-over-year.

Although new consoles tend to bolster sales, Pachter isn't convinced that the Wii U will mimic the kind of success its predecessor enjoyed in its early days. The analyst told Industry Gamers that the fact that third-party developers will be offering the same games sold on other current consoles means the Wii U is unlikely to see "significant" sales.

That said, prior to the Wii's launch, many folks thought that the console would fail miserably. So, while Nintendo's console might face some adversity, it might be tough to count it out just yet.

Nintendo plans to launch its Wii U next year. The company has yet to reveal an exact price or release date.