Apple, Microsoft Looking at Portable Games

Nintendo has dominated the portable gaming space since it introduces its Game Boy back in 1989. Since then, Nintendo has crushed competitors like Atari, Sega and SNK that attempted to compete with its Game Boy brand. Sony is the first company that has been able to hold its own in the portable space, carving out room for its PSP. Nintendo has several portable devices, including Nintendo DS, Nintendo DS Lite, Game Boy Advance Micro and Game Boy Advance SP on the market. As early as 2007, it looks like Nintendo and Sony will be joined by Apple and Microsoft in the portable games space, according to new online reports, Dean Takahashi's book and a new analyst report.

Videogame research firm The Diffusion Group released a new report, "On the Future of Portable Game Consoles: Analysis & Forecasts," which predicts that Microsoft will enter the lucrative portable games space as early as late 2007.

"Microsoft has been waiting on the sidelines until its gaming console and software business reached sustainability, all the while watching closely how Nintendo and consumers in general would respond to Sony's PSP," said Thomas Wolf, a portable media analyst and co-author of TDG's latest report. "With global PGC revenues expected to reach $3 billion annually by 2008, and with only Sony and Nintendo active in the PGC space, Microsoft has before it an incredible opportunity. It has a critical brand presence in the console space, the breadth and depth of gaming titles, and the marketing clout necessary to enter this space and win decent market share."

Microsoft has been evaluating two options regarding its portable gaming strategy: licensing a version of its Xbox OS for others to build portable hardware designs upon, or introducing its own branded PGC. "While licensing the software is consistent with Microsoft's larger strategy, and no doubt Microsoft has endured many failures in regard to hardware plays, the success of the Xbox presents Microsoft with a unique opportunity," said Michael Greeson, CEO of The Diffusion Group and co-author of the report. "Microsoft owns an established and highly-regarded hardware brand, meaning that they can enter the PGC market from a position of strength, a privilege not enjoyed by any other player except those already active in the PGC space."

Videogame journalist Dean Takahashi, author of two Xbox books, said that Microsoft was looking to get into the portable game space as early as next year. This new gaming machine would be separate from the recently confirmed Origami project, which is a high end portable PC.

According to online reports, Apple is hiring several videogame positions for a future iPod that could play games. Apple has dominated the digitally distributed music space for the past few years and has had early success with its iPod Video player. While the company has never focused on videogames with any of its computers, blending the ubiquitous iPod brand with gaming would be a great way to enter the portable games space and combat arch rival Sony. Whether or not anything eventually comes of this endeavor remains to be seen, but throwing Apple into the games space would certainly grow the audience.