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Mobile Internet: Final frontier for game vendors

Nintendo may have broken the pattern of game vendors, but can it compete in the mobile Internet world of iPhones and app stores?

Mobile services continue to mature, and the things you can do on a phone keep getting better even when we are forced to suffer with inconsistent and occasionally terrible quality from mobile carriers.

The vast majority of new services we see in the U.S. have some basis in the DoCoMo i-Mode service from NTT Japan. If you're looking for mobile opportunities, take a gander at Japan and Korea to see how mobile devices shape lives and society.

I spoke with Gerhard Fasol, head of Eurotechnology Japan about a recent report discussing Nintendo and Japan's gaming industry are effected by new devices like the iPhone and services like the App Store, as well as how Japanese electronics manufacturers are trying to make their console/device the center of user's lives.

Since DoCoMo's i-Mode started mobile phone games in 1999, "online and mobile phone games combined have outgrown the video game software sector and are certain to grow much more in coming years. The iPhone, for example, is not slowing mobile phone based gaming down...those who only count video game cassettes and consoles, certainly don't see the rapid mobile and online growth--and complain about shrinking markets."

But really what vendors are feeling is their shrinking control--game vendors and carriers have pushed their own walled gardens, which works fine as long as they can provide what people want--and sooner or later then can't. Think AOL versus the Internet if you need more explanation.

According to Fasol, games of all kinds used to be played in game parlors, and some of Japan's game giants were originally (and still are) game parlor machine makers (a round of Dance-Dance-Revolution anyone?)

These game vendors then moved on to consoles, cassettes and handhelds, taking the momentum out of game parlors, and establishing a pattern of growth by generations (today we are in the 7th generation).

Nintendo eventually broke the generation pattern and took games sideways into the "blue oceans of motion sensors and to the silver generation, women and other previously non-gaming majorities, while Xbox and SONY kept slugging out the generation game."

Japan game segments
Japan game segments Eurotechnology Japan

Nintendo may have broken the pattern, but the company remains vulnerable to both mobile devices like the iPhone and app stores that can deliver more than just one product to an end-user device.

The CEO's of Nintendo and DoCoMo (and Vodafone, Apple, Research in Motion, Palm and Nokia) all tell us they want to make their device central to everyone's lives--with built in cameras, payments, app stores, navigation, etc. And rightly so as the devices become more powerful and the software more advanced.

But few mobile devices offer the wide array of features and functions that create a great experience. There is a very compelling argument for Nintendo to create a gaming phone even if only for the Japanese market.

The big question for game vendors like Nintendo is whether they can figure out how to converge their games with mobile devices and cellphones. The time will come when people won't shell out for both a DSi and a mobile phone. The same goes for a PC, Wii and XBox. Users will eventually pick their weapon of choice and not be bothered with such a vast assortment of electronics.

Follow me on Twitter @daveofdoom.