Wednesday May 12, 11:14 pm Eastern Time
Nintendo makes it a three-way video game shoot-out
By Therese Poletti
LOS ANGELES, May 12 (Reuters) - Nintendo has made it a three-way shoot out in the video game console wars.
On Wednesday, Nintendo of America Inc. surprised the industry by announcing plans to release its next-generation system, code-named Dolphin, next year in time for the Christmas season.
Nintendo also announced a $1 billion technology agreement with International Business Machines Corp. and other major partners. IBM will develop for Nintendo a customized version of its Power PC processor chip, which is also the ''brains'' of Apple Computer Inc.'s Macintosh family.
Pricing for the Dolphin system was not announced, but executives at a news conference said it would be ''very competitive.''
Nintendo made the announcement on the eve of the video game industry's biggest trade show.
''No one was expecting that, they (Nintendo) had said they wouldn't be doing anything till Christmas 2001,'' John Davison, editor-in-chief of Electronic Gaming Monthly, said.
Nintendo has recently been looked upon in the industry almost as a toy company, with the huge success of its Pokemon games, which are a major craze among younger children. Its Game Boy hand-held game console is still popular with many ages.
Analysts said Nintendo's plans drastically alter the video game landscape, where some had predicted that next year's battle would be between the new Sony Playstation and Sega's Dreamcast, although Sony had been expected to remain dominant.
Currently, Sony Computer Entertainment America has an approximate 60 percent share of the video game console market, with Nintendo following at about 40 percent. Sega has sunk in recent years to number three with a slim market share.
''It's a tremendous slap for Dreamcast,'' said Richard Doherty, director of Envisioneering, a consulting firm in Seaford, N.Y. ''It's very likely to be a two-horse race.''
Sega of America plans a $100 million marketing blitz for its U.S. launch of the Dreamcast on September 9, in a major bid to regain lost share. The Dreamcast, which has faster and more realistic graphics, will be the first video game console with Internet access.
Sega plans to price its system at a relatively low $199 in the United States in an effort to attract more mass market buyers. But analysts do not see Sega taking much market share from Sony, even though Dreamcast is to be released a year ahead of Sony's new Playstation II.
Now, with plans for a system built on a super-fast chip using IBM's much-vaunted copper technology, Nintendo will surely challenge Sony. It has another important partner, Matsushita Electric Industrial, which will also manufacture the console, supplying its digital video disc (DVD) technology.
This pact could also lead to the Dolphin eventually becoming a set-top multimedia box or another computing type device.
While some Nintendo executives were predicting a two-horse race with Sony, its chairman prefers to wait before making any predictions.
''It really is premature to talk in terms of Nintendo versus Sega or Sony,'' Howard Lincoln, chairman of Nintendo of America, said in an interview. ''It's completely dependent on the quality of the software.''
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