Video of Wii 2: Nintendo Fights The Last War

Some interesting video from what's apparently a private developer presentation of Nintendo's new console... you can see the drawing of the controller, and the unit itself sitting on the table. From what this shows it seems the rumors about a controller with a built-in display are true.

The case design may or may not be the actual case design; it's easy enough to mock up a case or change it.Then again, the case design is really about the least important thing for a console. The price is more important, and I think that having a display in the controller is good evidence that the price point on this puppy is going to be north of $300. I suppose Nintendo could make the display controller optional to reduce the price point, but then that reduces the chances for third-party support of the display controller. And if the display controller is a key selling point of the new console, it would seem odd not to put one in the package. So I'm predicting there will be a display controller packed in with the console.

It does make some fiscal sense for Nintendo to leave out a hard drive; it's an expensive component, and requires  more power and other support. Cost is usually a key factor in console design, and especially for Nintendo, who hates to lose money on each console. They don't have the deep pockets of a Microsoft or a Sony to be able to afford a loss leader and hope to make it up on high-margin software later on.

Of course, if they wanted to support a local area network so you could store things on your computer's hard drive and just pass them along to your console, that would be an interesting way around the problem. But not one Nintendo is likely to use, seeing as how that would make piracy even easier. Nintendo spends a lot of time and effort to close down piracy, which makes sense given how high their software prices are.

I still think that Nintendo is building hardware to fight the last war, and creating something that's poorly positioned to fight the next battle in the family room. Nintendo's Wii 2 will be expensive (over $300, maybe $400 or even more) and rely on discs sold in retail stores, and have very limited functionality besides gaming (probably Netflix, maybe a music streaming service). Its main selling points will be graphics horsepower and a controller with a display. There will be some downloadable games available; they'll be small and with development tightly controlled by Nintendo.

Meanwhile, consoles based on smartphone technology (Apple TV and Google TV), and streaming consoles (OnLive) are heading to the family room on or before Nintendo's time frame. These consoles will feature low price points ($100 to $200), games distributed digitally, and a huge array of other media options and app functionality. Development will be wide open, and thousands of apps will be available. App prices will be low (less than $5 to $10) and many will be free, with a variety of monetization models (freemium, subscription, advertising-supported, and others). These consoles will also have the option of using smartphones or tablets as display controllers, as well as more traditional controller options. Motion control will be readily available, too. Social games will flock to these new consoles.

Nintendo may sell some goodly number of their new consoles, but they will be massively outsold by the smartphone-based consoles. Microsoft and Sony had better get some planning done about how they will respond to these events. Sure, they are both making more moves in the right direction than Nintendo, and right now the Xbox 360 and the PS3 are selling better than ever. In the tech business, though, things can change very fast. Look what's happened to RIM and the Blackberry... that can happen to consoles, too.