carre107

Blogs for Chapman's BUS-475-05 Capstone Course

Blog #7

This week I’m going to talk about the video game industry as a whole. The article I found this week, (http://www.businessweek.com/articles/2013-03-13/the-great-dumbing-down-of-video-gaming-consoles) is about how Sony and Microsoft are going to follow in Nintendo’s footsteps and use off-the -shelf AMD chips in their consoles. This is great for AMD who has now “locked up the gaming market”. In the past these companies made their own chips for a combination of computing power and graphics, but now that AMD does this so well, there isn’t a point for them to try to make their own chips in their eyes. This is good for gaming companies because they are keeping their manufacturing costs low by getting their chips already made from a third party. This can be good and bad for gamers. The good news is that since the costs to produce the consoles will be less, the price will also probably be less. “The downside here is that the consoles do not seem as special as they did in years past”. The article argues that with consoles life span being so long, the chips will be outdated compared to those in gaming computers. Not that this matters, but I think gaming computers are way to expensive and way to difficult to maintain. All consoles have to do is play video games and if they can do that with these chips, why does it matter? Nintendo, Microsoft and Sony would rather spend their resources on differentiation, like the articles example of the Xbox’s Kinect, rather than a chip functionality issue. Since AMD has been struggling financially, the author of this article is worried that AMD might not survive and that it would have a horrible effect on the video game industry. I think providing chips to every single video game console over the next 5 years at the least will keep them going. If they start to go under after that, I believe the video game companies could switch to Intel in their next wave of video games, make their own chips again, or maybe by that time there will be new technology where the games are virtual or something and you stream the games rather than run them through a console. Regardless of how it happens, the gaming industry will survive because there is a high demand for games.

Relating to last class, it seems that AMD has won the format war, at least in the video game industry. Of course having a standard chip throughout all video game consoles doesn’t mean that there is a compatibility between all consoles, but it will reduce production costs. I would say this chip standard in all consoles is a product of cooperation among the firms rather than from the government or market demand. It would be through market demand, but I don’t think gamers really care if Intel or AMD makes the processors in their consoles, as long as the consoles do what the have to do. Therefore I believe that since all companies want to use AMD, regardless of what the consumers think, they have attained standardization through cooperation. In the end, I would say that this agreement is great news for AMD, the console makers, and the gamers whether they realize it or not yet. Gamers have to remember that technology is constantly changing and even if the chips are outdated in a few years, the next wave of consoles will already be on the rise.

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Blog #6

Research has discovered that playing Nintendo Wii games can train surgeons. There are a few articles on this, but this one seems the most relevant (http://www.latimes.com/health/boostershots/la-heb-nintendo-wii-trains-surgeons–20130228,0,6961711.story). Specifically, surgeons who played the Wii performed better on surgical skill tests than those who didn’t play the Wii. Basically the Wii helped surgeons be better surgeons, specifically in tasks required by laparoscopic gallbladder removal surgeries. Many surgeon training programs have laparoscopic simulators, but they are very expensive. “Video-games may be a cheap and widely available product, helping to develop cognitive skills that, apparently, can be transferred in improved surgical performance.” Since this research has proven that the Wii helps surgeons, it may be an option for Nintendo to produce games that may further develop the specific skills that surgeons are looking for. “The Nintendo Wii may be adopted in lower-budget institutions or at home by younger surgeons to optimize their training on simulators before performing real procedures.” If hospitals and trainees buy the Wii for the purpose of improving their surgical skills, Nintendo may have the option of targeting a niche market. Creating surgeon-specific games and selling them to hospitals could be a potential option. It would be great for Nintendo because they will indirectly help to save lives and it will be a fun way to train surgeons. I’m not saying that surgeons shouldn’t use the professional simulators, but Nintendo could be a cheap option that can still help surgeons and fine tune their skills. I wouldn’t say that video games are a declining industry, but if it were, one of the strategies is a niche, in this case providing simulation games for surgeons. Nintendo has the option of implementing a focused business level strategy, although it wouldn’t be truly focused since they would be making games for so many other customer groups.

Blog #5

This week’s blog is one on a topic I mentioned in class briefly. It is an older article, but I feel like it is a pretty important part of what Nintendo is doing and I happened to miss it. So it’s not quite current, but certainly relevant. The article can be found here: (http://allthingsd.com/20130123/nintendo-wii-u-virtual-console-performance-improvements-coming-this-spring/?KEYWORDS=nintendo). It basically summarized a presentation by Iwata, Nintendo’s president, that he gave near the end of January. Iwata basically apologized about the fact that there haven’t been any new Wii U games released in the past couple of months and that Nintendo is working on a lot of “quality” games and updates. The quality games they are talking about are remakes of old games like Zelda: The Wind Waker, or new games that are basically just extending a series of old games like Mario Kart. The other big announcement was that Nintendo will release two updates, one in Spring and one in Summer. The updates will make the Wii U run slightly faster and will allow gamers to download NES and Super NES games. One game a month from the NES or Super NES will be released at a huge discount of only 30 cents per game.

What I take from this announcement is two things: The first is that Nintendo is trying to utilize the customer responsiveness building block since they are basically compensating gamers for the lack of good games recently. The second thought I took away from this is that Nintendo is not utilizing the innovation building block. Nintendo has always used the innovation block predominately, but it looks like they are slowly slipping away from that. They are innovative with controllers and consoles, but not as drastically innovative as they were when they came out with motion controls. Also, the fact that they are releasing really old games and remakes of games instead of new titles makes me believe that, at least in the game category, they are not innovative at all. It appears that their main source  of customers consists of die-hard fans that loved Nintendo and its games when it was in its prime. Nintendo has arguably the best classic games, but with a changing game industry (which I will discuss in response to a comment from last week’s blog), it appears that will not hold up forever.

Nintendo is essentially switching building blocks. Unfortunately, I don’t think this will work. The two go hand in hand in this industry. The customers want innovation, so if you are going for customer responsiveness, you need to be innovative. These classic games will only hold up for so long and continuing old popular series of games will become less and less popular. Sony and Microsoft have systems with many new games that turn into these great series of games, but when one becomes a series, there is a beginning of a new one. They are maintaining a cycle, not simply dwelling on the past and milking it for all it’s worth. Maybe I’m being a bit too harsh, but I really don’t want to see a great gaming company crumble. It would be terrible to see Nintendo turn into a company like Airborne Express. They were great and highly innovative for so long and then had to sell themselves.

By the way, do you want us to respond to your comments in the comment section of the blog you commented on, or address it in the next blog? I’m assuming a reply to the comment in the same blog is probably best rather than carrying it over to the next one.

Blog #4

No new news directly about Nintendo, but I have news that is quite relevant to Nintendo. One of Nintendo’s biggest rivals, Sony, announced the release date and many details of their new video game console yesterday, February 20. There are a whole bunch of articles on this. PS4 has its own site with many details as well (http://www.ps4playstation4.com/ps4-release-date-countdown-begins). The PS4 is expected to release this holiday season, around 1 year after Nintendo released its Wii U.

From previous blogs I mentioned that Nintendo should capture as much market share as they can with their console before the other major video game consoles catch up to them and release their new consoles. Well, the time has come for Nintendo to begin to worry if they haven’t been already. With Wii U sales already less than they were projected to be, I can’t imagine what the release of PS4 will do to their sales. I believe Microsoft will also be announcing their new system sometime in June, so there’s even more to worry about.

I also mentioned previously that Nintendo’s main building block is innovation. They made a controller that was unique to all other consoles and that was one of their main selling points. PS4 is releasing a controller that is going to be similar to the Wii U’s controller, briefly mentioned in this article (http://herocomplex.latimes.com/games/ps4-10-things-you-need-to-know-about-the-ps4/#/11). The PS4’s controller will have a touch pad in the center and remote sensing for motion control, just like Nintendo. The new generation of console wars has officially begun and Nintendo’s Wii U will no longer be the only new system on the market. I really hope they can produce some quality games and stay afloat using the favorable currency exchange rate while they figure out how to combat these new systems. It is difficult to do much more than reporting here because I feel that I have really made all the recommendations to Nintendo that I can at this time.

Blog #3

I have found another article from businessweek.com (http://www.businessweek.com/ap/2013-02-12/cheap-yen-a-boon-and-a-risk-for-japan-companies). This site has been really good to me thus far. The article basically talks about the decrease in the value of the yen overtime and how it will help and hurt Japanese companies, including Nintendo, of course. The cheap Yen is boosting these companies by getting a favorable exchange rate. Since Nintendo’s sales in America are in American currency (obviously), when they sell the Wii U and other products to Americans they are converting that money to a whole hell of a lot of Yen, and in the past they wouldn’t have gotten as much Yen per American dollar. While this doesn’t help them the other way around, it is helping them at home. If they hire Japanese people to make their games and systems, they can pay them the same amount or even more money and still have extra Yen leftover.

However, the article warns that for these companies that aren’t doing so hot, there is danger that the boost will be “insulating some companies from pressure to overhaul their businesses”. In other words, the fact that they are making more money from currency exchange, might prevent them from thinking about ways to change their company for the better. If Nintendo doesn’t assume the Yen will eventually become stronger again, they may not look ahead and prepare their companies for future issues. The currency exchange is helping them temporarily, but also giving them false hope in a sense. The second page of the article gets a little more specific about Nintendo. “Its currency gains for the nine months to December totaled 22 billion yen ($242 million)”.

So, referring to lessons learned in class, this is an opportunity, and if not careful, a threat to Nintendo, especially if they start spending some of this ‘extra’ money and find out it was a bad move down the road. Also, this is clearly a Macroeconomic force.

Blog #2

After searching on businessweek.com again, I have found another Nintendo article (http://www.businessweek.com/ap/2013-01-31/news-summary-nintendo-rules-out-wii-u-price-cuts). The president of Nintendo won’t be cutting prices on the Wii U even though its sales have been lower than usual. Being a gamer who has tried the Wii U, I’d like to say that I’m afraid I haven’t bought, nor will buy the Wii U unless the price drops or if they make changes to the system. I’m sure part of the reason sales were not high is because of the price. One of my biggest concerns about the system is that anybody other than the primary player has to use an old Wii controller. Why would you invent an awesome new controller with a lot more capabilities and set up your system so that only one person can use it at a time. This makes multiplayer, a fast growing part of the video game industry, not as fun.

If Nintendo can’t get sales to increase, I would suggest decreasing the price of the console, at least to $250 instead of $300. They have to capture gamers and their wallets before the new PlayStation or Xbox is released because in the past, those systems have outperformed the original Wii and have caught up to Nintendo’s technology anyway. The Wii had a unique edge in the sense that its controller was motion-controlled. When the Xbox360 and PS3 released the Kinect and the Playstation Move respectively, Nintendo lost that edge. Sure some of their games are for the Wii only, but both other companies have unique games for their systems as well, like Halo and God of War. The point is, I don’t believe they’ve improved their system enough to compete with whatever improvements the Xbox and Playstation will have in their upcoming consoles. Not dropping the price could end up being a costly decision if other game consoles bring their “A games”. The bargaining power of buyers is high in this industry, as there are really only 3 companies making video game systems worth buying. Obviously, the rivalry among the established companies is extremely high as well. The fact is, buyers will switch consoles and the rivals will win in this industry.

Blog #1

As the title suggests, this is my first blog. Believe it or not, I’ve never written a blog before, so I don’t know how the format should be or how they are normally written. I’m just going to wing it. First of all, I’d like to reflect on the first day of class. This class seems informative, practical and amusing, thanks to a funny professor. I like that Professor Tuggle uses a lot of examples when he explains concepts. Daily news reports will scare the crap out of me because I hate talking in front of people, but I’ve managed to survive my whole life doing so and, as stated in class, you won’t get to far in business if you’re a wallflower. I liked the lecture about a company’s mission, because I never thought of the perspective of broadening your mission, looking for a potential vision in the company,  rather than trying solely to make your specific product the best it can be. The examples were eye-opening. I didn’t realize that Kodak invented digital cameras and were too stupid to release something that phenomenal just to try to hang on to their old aspect of the company.

As for following a company, I’m hoping I can stick with Nintendo because of my passion for video games. I’m going to talk about some Nintendo news for now, but first here are my choices for preferred companies:

Nintendo

Electronic Arts

Activision Blizzard

Hershey

Home Depot

As for Nintendo, a recent article from businessweek.com (http://www.businessweek.com/stories/1995-01-29/a-nintendo-noose-for-samsung) reported that Nintendo discovered Samsung’s name in a layer of epoxy in a pirated copy of their game. Nintendo is now suing Samsung. This raises a lot of questions. For example, was this pirated copy of the game produced by Samsung, or did someone take a Samsung chip and put it into a game that they pirated. I don’t know much about how to illegally make video games (thank God I’m not a criminal), so I don’t know how this happened, but if I were Nintendo, I would not only sue, but drop Samsung as their chip supplier. Nintendo reportedly warned Samsung multiple times to stop producing counterfeit video games and I wouldn’t want to be in business with an untrustworthy company. I’m sure there are other chip suppliers that would love to be a part of a company that makes so many popular video games, and therefore profits. They have not decided whether or not to cut Samsung off, so I think they should seek other suppliers and if they line one up, they should dump Samsung.