Why Sony and Nintendo can't write off iPhone threat

As you'll know if you read our stories on comments from Nintendo and Sony yesterday, we're not hugely impressed by their public attitudes towards the threat posed by iPhone and iPod touch to DS and PSP.

Perhaps we were a little unfair - neither company would be expected to say publicly that they're spooked by Apple's claims to be taking them on in the handheld gaming space.

But it's more the attitude in what they did say, whether it's Nintendo's David Yarnton saying "Mobile phone gaming has been 'going to happen' for a long time...We're still waiting,", or Sony's Ray Maguire saying "As a specific games machine, the PSP is always going to win out."

The latter statement is particularly interesting - it shows Sony's desire to set the rules of engagement: handheld gaming is about dedicated handheld gaming devices bought by people who specifically want to play handheld games.

Apple isn't playing by those rules, though.

At issue is whether the potential audience for handheld gaming is much bigger than that, and the kind of games they want to play are different.

The idea of a "specific game machine" feels increasingly outmoded, in any case. It's now more about handheld devices that play games, but also music and videos, take photos, surf the web, access email, run downloadable apps and, yes, let you talk to people.

Nintendo and Sony both know this: just look at the DSi and various add-ons (software and hardware) for the PSP. It's on this territory that their devices are going up against iPhone and iPod touch.

The handheld games market is changing, and whatever their UK bosses say in public, Sony and Nintendo both know this.

It's shifting towards a market where digital distribution, lower pricing and a wider variety of games - and gamers - are the defining characteristics.

So it's perfectly true to say that most hardcore PSP fans won't abandon that device for a buttonless iPhone, and that the very separate DS demographics (Nintendophiles and tweens/teens, plus Japanese grannies) will remain loyal for a while yet.

But the point is that the handheld gaming market may be about to get much bigger than that: the hundreds of millions of people who wouldn't buy a specific gaming handheld, but may own an iPhone, iPod touch - or indeed any high-end mobile handset with its own app store.

I'm not even sure it's a battle between Apple, Sony and Nintendo.

There's an argument to say Sony and Nintendo can continue making money from their core demographics, while Apple goes after the much larger casual gaming pie.

Under that reasoning, Apple's desire to bring the Metal Gear Solids and Quakes to iPhone is maybe less relevant than its ability to get people who don't consider themselves as gamers to buy iShoot, Zen Bound and Flick Fishing.

The competition for consumers may be a smokescreen, in other words. Apple isn't really going after Sony or Nintendo's customers: it has its eye on a larger prize that the console firms aren't geared up to target.

But the sniping between these three companies shows that they don't see it this way.

The console market has a long and entertaining history of dominant hardware players being caught on the hop when the market dynamics shifted around them.

Nintendo may have successfully bucked that trend in the handheld space ever since the first Game Boy, but make no mistake: the success of iPhone and iPod touch IS a threat to this dominance, and one that behind closed doors, both Sony and Nintendo are surely taking very seriously.

Stuart Dredge is editor of PocketGamer.biz, and has been writing about gaming and the mobile industry for ten years.