Seize the Day Nintendo... Seize Nintendo Apple

Tonight I decided to stop into a GameStop [GME] store not far from my house in suburban New Jersey to see firsthand the battlefront in the ongoing video game wars. When I got there I saw two display kiosks. One featuring Nintendo's[NTDOY.PK] new Wii and the other featuring Sony's[SNE] new Playstation3. There was a crowd of teens mesmerized by someone "steering" the Wii's remote control wand as he drove an SUV over a rough road course. Next to the Wii display there was a sole youngster playing the new PlayStation3- a basketball game, I think EA's NBA 2007. He was slam dunking the ball, but no one was paying any attention to him. It was the same old sports game, only with a much crisper high def image.

With everyone lined up behind the Wii, at first I didnt even realize that the other kiosk contained the new PS3 until the Wii game ended and I looked more closely at the PS3 display. Same old black box, compared to Nintendo's pristine white vertical wedge shaped console. The picture was great.

I asked the store manager if I could buy a Wii and he said, only those with pre-orders could get them when they begin selling tomorrow. But in two weeks he promised me that they would be shipped more. I then asked how many Nintendo would be there for launch and said 36. I asked him how many PS3's they got and he said 10, and he didnt know when Sony would ship more.

Ten PS3's is just pathetic and 36 Wii's is also pretty bad, but theoretically Nintendo will be shipping more soon. They have said that they will deliver 4 million units this year. I polled some of the youngsters in this particular GameStop and no question, all of them were wishing for PS3's. But when pressed, none thought they could afford the $500 or $600 it will cost. It was those same kids who want the PS3, who were standing mesmerized in line to play Nintendo's new Wii console.

I asked one 20-something playing the PS3 what he thought he would do. He said, " I already got my Xbox360 with the graphics and I am going to buy a Nintendo. That is all I need an Xbox and Nintendo. To me, Nintendo is into making games that are good to play and Sony is into making good graphics."

Here is a bold prediction. Just as Apple [AAPL] had been left for dead in the pc business as Windows machines from places like Dell [DELL] gobbled up market share through the 1990's, Nintendo has recently been viewed as an also ran in the video game console business. But thanks to Job's brilliance, Apple has re-emerged as a force in digital lifestyle products. Job's iPod has charmed the globe and put the joy of music into everyone's pocket. His elegant line of Apple MacIntoshes now do everything a Windows machine can do, typically more easily and elegantly, and they are agnostic to operating systems. Mac's can now easily run Windows. With proprietary hardware and software and innovative design Apple is changing consumer behavior. Sit back and watch as MacIntosh computers and iPods sell like hotcakes this holiday season and Apple gains market share.

President Saturo Iwata has a similar game-plan for Nintendo. Intelligent design and innovative gameplay will help Nintendo recapture its prominance and expand the market for video gaming. And I am not just talking about hardware like the Wii or Nintendo's DS Handheld which is a big success. It is also the company's innovative games, BrainAge, Nintendogs and a 20 plus year old Mario Brothers franchise that seems to get stronger with each new release.

Remember a few years ago when Apple was repeatedly poo-pooed by analysts and others as "a great computer for designers or musicians." Just a niche player. Nobody looks at Apple as a niche player anymore. It has a market cap bigger than Dell's and it's positioned smack in the center of our Digital Future.

Similarly, Nintendo is often dismissed as a "video gaming system for kids." I think a year from now people will be singing a similar different tune about Nintendo much the way they are for Apple currently. Nintendo wants to be a video gaming system for everyone.

Over a year ago I told a friend of mine who used to be very high up at Activision [ATVI] that I thought Apple and Nintendo would be a good merger. He kind of look at me as though I was a bit off.

The Japanese have a respect and reverence for Steve Jobs and Apple. Also, Apple and Nintendo have similar buiness models. Apple has a market cap of $70 billion and Nintendo abotu $30 billion. I have said before that video gaming is an important part of digital entertainment that Apple has yet to really crack. Nintendo would solve that. Then they could hook up with another company in Job's portfolio, Disney [DIS], which bought his Pixar animated movie company. I can see the Donkey Kong and Mario Brothers rides being very popular at Disney World. Or how about a Legend of Zelda movie by Pixar. In the meantime I'll just hold on to my shares in Apple, Nintendo and Disney and dream.

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Amazing Video Game Stocks - Except Sony

Have you been watching the action in video gaming stocks since early July? Activision [ATVI] is up 41% %, Electronic Arts, up 35%, Take Two Interactive, up 66%, retailer GameStop up 34%, and THQ up 43%. Even behemoth Microsoft is up 24% which is more than double the return of the S&P 500 over the same time period.

Unfortunately one video gaming company, Sony has been left out of the party and its shares are actually down since July. As many of us have been hearing, Sony's launch of its new console PS3 looks like a disaster in the making. I am reading reports that at least one analyst at Lazard Capital is saying Sony will deliver only 200,000 PS3's on launch day November 17th and by year end may only ship 750,000 unit in the U.S.

So, not only is the console pricey at $500 to $600 a pop, but they will be scarce as hen's teeth. Get ready for lots of dissappointed kids, teens and shareholders this holiday season. There is even more bad news. Apparently the new PS3 is not delivering on the backwards compatibility it promised. In other words many old Playstation and PS2 games like the popular Guitar Hero from Red Octane aren't working right on the new PS3. This gets worse when you consider that there may not be a lot of titles immediately available for the PS3. So what are you going to play on that new $600 system?

I have been bullish on Nintendo for some time and own shares currently. Still, the Wii console, which will make its debut two days after PS3, is looking like a big winner. At $250 each, Wii's will fly off the shelves of stores like GameStop, Best Buy and Walmart. Analysts are expecting at least 1.2 million units sold in the U.S. this year. I think they will beat that number. Nintendo, which is trying to expand the gaming market via innovative gameplay will also have brisk sales of its DS handheld and games from its Mario franchise and the Legend of Zelda, which is finally due out in the coming weeks.

Another great way to play this year end boom in video gaming is via the game makers, otherwise known as software providers. I own Electronic Arts because it is the blue chip name of the group, but Activision also stands to do benefit as does Take Two Interactive, maker of Grand Theft Auto and a new violent schoolyard game that is apparently great but not for younger kids, named Bully.


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