Martin Flanagan: Shift to smart phones proves a game–breaker
Apple and Google are leading the way in smart phone technology
SAYONARA, Super Mario. Hello, the iPhone, iPad and social networks. Game‑changing developments are transforming the electronics landscape and putting more venerable competitors to the sword.
The shock trading statements from Nintendo and NEC show how far things in gaming and telecoms has moved on from when Japan bestrode the world in consumer electronics.
Those Japanese giants are now haemorrhaging money, jobs and prospects as their obsolescent technology metaphorically rusts before the onslaught of the likes of Apple and Google.
Nintendo, creator of the Super Mario franchise that saw millions of sleep‑deprived parents regularly outplayed by their offspring just a decade ago, saw profit in its traditionally strong October‑December quarter slump to ¥40.9 billion (£336m).
That was much worse than a consensus estimate of ¥52bn, and Nintendo now expects an annual operating loss of ¥45bn, astronomically higher than previous market expectations of a ¥4.2bn deficit. It comes the day after Apple shot the lights out on Wall Street with its own fantastic quarterly figures.
A key problem is that Nintendo made its fortune on hand-held games devices that now look to be going the way of the dodo as sales of more versatile smartphone and electronic tablets boom.
Meanwhile, the mighty NEC says it is to slash 10,000 jobs to cut costs as it also reveals rivals such as Apple have helped push it into the red.
There is weak demand for NEC’s smartphones as Apple’s iPhone is beginning to beat it up on its own Japanese turf while the same technological superiority of the American cutting‑edge electronics giants is also hindering the Japanese group’s aspirations abroad.
NEC warns that it will post a net loss of ¥100bn in the year to end‑March after booking a net loss of ¥87bn for the final three months of 2011.
It is a stunning slump. Previously NEC was forecasting a reasonable profit for its latest financial year.
A recent example shows how the writing has been on the wall for the relatively sclerotic Japanese electronics industry.
Nintendo’s vaunted 3DS handheld games device was launched early last year with uncustomary oriental fanfare, a sort of the-fightback-starts-here moment. Within six months prices had been slashed due to disappointing take-up.
The company has now cut its forecast for annual sales of the 3DS device from 16 million to 14 million. It will also not be much consolation to the Japanese group that Google is taking steps into gaming with Google TV, while Apple is rumoured to be working on a new “smart” TV.
Meanwhile, NEC has slashed its forecast for mobile phone sales by nearly a quarter amid the raids into Japan by all-singing, all-scrolling American products.
It must be chastening for Japanese industry. It rode high, wide and handsome until the country’s property/stock market bubble burst in 1990, ushering in a lost decade of stagnation, but at least for well over a decade after that it at least retained electronics cachet. That all changed when a non-stopping technology train left Silicon Valley in the States.
Philips ready to back mothers and babies
MOTHERCARE will be throwing its toys out of the pram if Morrisons proves the former’s faltering momentum in the UK was simply down to failing to inveigle young parents out to stores the size of aircraft hangars in order to purchase bonnets, buggies and primary coloured things.
Morrisons is to take its overwhelmingly internet-based retailing arm Kiddicare out of cyberspace by buying ten former Best Buy megastores from Carphone Warehouse.
It is a twist for the market from the supermarket group’s boss, Dalton Philips. Many thought he swooped to buy Kiddicare to give Morrisons internet expertise, an area where the supermarket giant is seen as being slow off the mark.
But it looks as if Philips really does believe that the mother and baby products market, contrary to Mothercare’s problems, is a growth area in its own right. If Morrisons earns a shedload of cash from the venture it will prove his case.
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