Portable consoles set to enter hardware arena

Sony, Nintendo, Nokia likely to tout new wares at E3

This year’s E3 will be as big as ever, but don’t expect any mammoth announcements on the hardware front.

The console market is approaching the end of its roughly five-year cycle and the biggest news is price reductions. Microsoft recently dropped the price of its Xbox to $149. Nintendo is trying to boost its market share with a more kid-friendly price of $99 on its GameCube. And market leader Sony, anticipating a 30% drop in sales of its PlayStation 2 this year, may well follow suit — particularly if the competition edges too close.

Next-generation console announcements from the big three are still a year or more away; the only company with anything to offer in that space is newcomer Infinium Labs with the Phantom, which launches in November and will be given away free but require players to download games from the Net at $30 per month. Infinium hasn’t announced any content partners yet, but plans to primarily port existing PC games.

The big focus right now is on the portable market. At last year’s E3, both Nintendo and Sony announced they were developing new handhelds. This year, expect to see something a lot more solid. Nintendo’s still unnamed dual-screen portable gaming unit is on track to launch by the end of 2004, while Sony’s PSP (PlayStation Portable) will land in North America in first quarter 2005. Both companies will show their wares, but in advance of the big E3 splash are playing their cards close to their chests regarding specifics.

Nintendo’s Beth Llewelyn says that with its two screens, the “DS” will enable nonstop action for players and a sleeker platform for game developers.

Sony’s aim is to introduce the “Walkman for the 21st century” with its first handheld gaming device, the multi-function PSP. It showcases Sony’s new Universal Media Disc technology — essentially a 1.8-gigabyte optical rewriteable disk — for “a fusion of media content such as games, music, movies and publishing,” according to Sony Computer Entertainment’s Teresa Weaver.

Sony has a vast game software library it can port over from the PS2, which will benefit the company in a market entirely dominated by Nintendo. Both companies’ experience and deep pockets are likely to threaten the existence of smaller competitors such as Tapwave, whose well-spec’d pocket-sized Zodiac may get lost in the battle of the big boys.

Mobile phone vendor Nokia’s entry into the portable game console space represents an interesting twist. Though its first N-Gage gaming platform-cell phone-MP3 player wasn’t well received on its release last November, its successor, the N-Gage QD, shows promising improvements and is shaping up as the all-singing, all-dancing gadget for the wireless generation.

“It’s pretty significant,” says In-Stat/MDR senior analyst Brian O’Rourke, of the Nokia N-Gage. “Because they have mobile phones that do gaming, it’s not like they’re taking a leap of faith into a new area. They can bring their design expertise to bear on it.” As a newcomer to an established space, Nokia’s big challenge will be developing a compelling software library that will entice consumers to buy the product, he says.

Nokia, which is bundling Activision’s extreme sports smash hit “Tony Hawk’s Pro Skater” with its first shipment of N-Gage QDs in June has licensed games from major publishers such as Electronic Arts, Activision, Sega, Eidos and THQ, and will announce other third party developers at E3. It’s also developing its own titles for its Arena wireless multiplayer gameplay space.

“With life going mobile, these two trends intersect” in the N-Gage Arena and the Arena titles, says Nada Usina, Nokia’s GM of entertainment and media.

O’Rourke estimates a 15% growth in the overall market for mobile gaming devices over the next year. It’s an area that, according to research group Informa, could be worth a potential $3.8 billion worldwide by 2007.

Meanwhile, notebook PCs geared-up for power gamers are starting to make a dent in the portable gaming world. In the last few months there’s been a surge in high-end games-oriented laptops, such as those from specialty companies like Alienware and Voodoo, as well as bigger PC manufacturers such as Toshiba and Dell.