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Sony and Microsoft do not have this problem as they have a vertical structure. There is risk in this model; the loss of a major supplier could cripple Nintendo’s supply chain. The company has found a way to capitalize on using many suppliers to reduce COGS, but this should not be considered a competitive advantage – it is more of a pricing advantage.5.Rivalry a.Rivalry is strong in the gaming industry. Nintendo, Sony and Microsoft are in a constant race to technology and pricing. RecommendationNintendo has a clear competitive advantage in the marketplace where the case ends, in 2006. The company’s main competitive advantage is that each console sold is profitable to Nintendo and is the lowest-priced console in the market. Nintendo should maintain this pricing and margin advantage to maintain its competitive advantage.
To keep costs low Nintendo should outsource new games using an open source strategy and give developers the tools needed to develop new games outside the Nintendo ecosystem. This will drive innovation, and allow Nintendo access to the best and brightest new talent in the industry. In addition, Nintendo should capitalize on developments in the wearables and the IOT to integrate the Wii console and technology into the best and brightest disruptors in these spaces. Nintendo should strategically partner with organizations that promote the “exergaming." NGOs and non-profits that focus on physical fitness, health, and sports are good candidates to partner with and developgames for. These organizations have captive audiences that can help market Wii as a tool for exercise, development, or learning.
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Case Study, Wii, Video game console, PlayStation 3, Nintendo, Nintendo GameCube