It went from the probable over this weekend, to the certain on Monday. Nintendo’s stock fell 15 percent to 12,445 yen, the biggest intraday plunge since 2011. Now the pressure is on Mr. Iwata, literally. The embattled President of Nintendo must address its shareholders in the coming weeks. On the actions he and the rest of his management team will take to boost sales and stop the hemorrhaging of money in light of the quarterly losses.
President Satoru Iwata should concede defeat with the Wii U, shut down production and open up Nintendo's iconic software characters such as Zelda and Super Mario to the smartphones, tablets and consoles that have made a shambles of his strategy, Nintendo should exit hardware altogether.”-Michael Pachter, an analyst with Wedbush Securities
The consensus amongst media outlets, points towards Nintendo leaving the hardware business entirely and strictly cater to software development. However, this may just be the wrong direction to take. Great software does move hardware, but the hardware also has to compliment the software from all development parties for it to truly succeed.
The culprit of Nintendo’s troubles is the Wii U, undeniably at this point. The Wii U hardware design, general capabilities and lack of product differentiations with its predecessor are the key reasons why it’s not flying of the shelves. It’s not the 3DS portable console which is putting up respectable hardware and software sales numbers, amidst stiff competition from Apple, Android and Window Phone.
Underselling consumers has finally caught up with Nintendo, Sony and Microsoft with their powerful new consoles have successfully crushed the Mario Bros. maker. Killing off the Wii U console as Mr. Pachter recommended, is the best course of action at this point. Licensing Nintendo key franchises to mobile is the best way for Nintendo to return to profitability, while they go back to the drawing board and develop a true next generation console.