Page 253 - GLOBAL STRATEGIC MARKETING

Nintendo plans to launch its GameCube in the United States three days
before Microsoft lauches the Xbox console. The GameCube will have

wireless control and is aimed at a slightly younger market. The GameCube
console will not have the ability to play CD’s or DVD’s. However, Nintendo
is also a software producer and has a reputation for providing some of the

best games on the market and will be able to offer popular games such as
Super Mario Brothers and Pokemon with the new console. It is currently

assumed that it will be slower than Xbox but will be priced at $199.95,
which may be attractive to many parents.

The world console market is estimated to be worth $20 billion a year.
Microsoft plans to spend $500 million on promotion in the first year alone.

It is estimated that Sony has spent $750 million on promotion in the first
year alone. Also, when Sony launched the PlayStation, it was able to
discount prices in order to gain a significant market share. Sony lost

money on every console sold but gained the largest market share.
However, through licensing deals with the software houses it made money

on every game sold and created large profits for Sony. The games
companies were also content because they were making strong profits
from a games market that was expanding due to lower priced consoles.

The case study has been prepared from a variety of different sources.

12.2.1 Discussion on the Xbox console

It has now been nearly ten years since the introduction of the XBox and
the market has developed at a phenomenal rate. This technologically

deterministic industry has seen the rapid development of technology
enhance the features of the Xbox and Xbox 360 and now the Xbox720 as
well as the development of Play Station, 1, 2, 3 and eventually 4. This is a

huge growth industry with huge growth potential. However, the market has
changed significantly since the launch of the Xbox. Microsoft (Xbox) and

Sony (Play Station) were so busy competing against each other that they
failed to realise the potential of Nintendo as a direct competitor. The
GameCube was not as successful as the Xbox and Play Station but what

Nintendo have cleverly done is to capitalise on new technology, design