iPod Touch 'Coolness Factor' Tough for DS to Overcome, says Pachter

Nintendo today revealed that it's sold a whopping 113 million DS units (10 million of those are DSi). That said, in the last couple years Apple has really seen its games business accelerate on the App Store with the iPhone and iPod Touch. Analyst Michael Pachter of Wedbush Morgan Securities noted that the iPod Touch in particular, because of its price, is a very worthy competitor for the DS.

"The DSi carries a relatively high $169 price point, and the DSi XL is likely to be priced even higher, making the purchase of a $199 iPod Touch more tempting for gift givers. While we think that the DS is a superior gaming platform, the iPod is a more versatile device, and has a 'coolness' factor that is difficult to overcome," Pachter commented.

He added that iPod Touch might already be eating into Nintendo's DS software sales: "It is possible that piracy in Europe and some substitution of iPod Touch games has impacted DS software sales more than we expected, and we will monitor DS software sales going forward to determine if these factors continue to threaten Nintendo’s business."

Pachter also commented on the Wii business, how it's become far more seasonal than traditional consoles, and how the price advantage has all but evaporated. "We think that Wii software sales will reflect far more seasonality going forward than has historically been the case, given the incredible popularity of Wii hardware among more casual households. Third parties have had difficulty reaching these households, and Nintendo has proven adept at providing just the right software to its large installed base," he said. "We think that Super Mario Bros. Wii could be a surprise success, as we think that game will resonate with Nintendads (those fathers who grew up playing Nintendo games and who now have an opportunity to play the multiplayer Mario game with their children)."

He continued, "We also think that lower pricing on the PS3 and Xbox 360 will provide consumers with a more difficult choice when considering a new console. The Wii enjoyed a $350 price advantage over the PS3 at launch, and a $150 advantage until last month. Now, the gap has narrowed to $100, with the feature-laden PS3 a tempting purchase for prospective console households."