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Apple’s Not the Only Tablet Maker With Problems

Some women use an Ipad at theTelefonos de Mexico SAB, Telmex and the Telcel's Digital Village at the Zocalo in Mexico City, Mexico on Friday,  July 24, 2015. Photographer: Susana Gonzalez/Bloomberg
Susana Gonzalez—© 2015 Bloomberg Finance LP Some women use an Ipad at the Telefonos de Mexico SAB, Telmex and the Telcel's Digital Village at the Zocalo in Mexico City, Mexico on Friday, July 24, 2015.

The worldwide tablet market is shrinking.

Apple APPLE INC. AAPL -3% investors have probably all already heard this by now: the iPad isn’t doing so hot right now. Units are on the decline, despite regular refreshes and an expansive lineup. That’s undeniable and painful for bulls to watch unfold.

But there’s far less consensus regarding whether or not the iPad’s current predicament is cause for concern in the long run. Is the device simply taking a breather while hitting a speed bump, only to resume its upward march? Or did Apple fail to deliver the tablet renaissance that it assured investors it could? Of course, only time will tell which of these scenarios turns out to be true, but it’s also worth noting that it isn’t just Apple that’s suffering. Despite its youth, the broader tablet market is undergoing some growing pains.

The third time is not a charm
Market researcher IDC has just put out its latest estimates on worldwide tablet shipments, and the market has now posted its third consecutive year-over-year decline. This time around, worldwide unit volumes came in at 44.7 million, down 7% from a year ago. This isn’t exactly how a growth market is supposed to look.

Idc Tablets

SOURCE: IDC

Here are the top five vendors right now, according to IDC’s figures.

Vendor Q2 2015 Units Q2 2015 Market Share Change
Apple 10.9 million 24.5% (17.9%)
Samsung 7.6 million 17% (12%)
Lenovo 2.5 million 5.7% 6.8%
Huawei 1.6 million 3.7% 103.6%
LG Electronics 1.6 million 3.6% 246.4%
Others 20.4 million 45.6% (9.3%)
Total 44.7 million 100% (7%)

SOURCE: IDC

It’s meaningful that Apple’s decline was worse than the broader market, evidence that rivals are finding some success in stealing market share away from the iPad. To some extent, this is also a function of Apple sitting on the sidelines of the low-end tablet market, content to watch Android competitors eat each other (and their profits) alive through commoditization and intense pricing pressure. Apple figures that it has 76% market share in the U.S. for tablets priced above $200, so it’s happy enough.

IDC attributes the tablet market’s current weakness to a number of factors. First off, the life cycles and upgrade cycles are a bit longer than the smartphone. Second, there is some inevitable cannibalization happening from large smartphones and phablets. Lastly, the hardware upgrades that vendors are introducing aren’t the most compelling refreshes, and most tablets are still able to receive software updates to the latest operating systems. This trifecta is hurting consumer tablet demand.

Any day now, enterprise market
Can the enterprise market be the shot in the arm that tablet vendors really need? Apple certainly seems to think so. After all, that’s the whole reason why the Mac maker partnered with IBM in the first place. Last year, Tim Cook noted that while 99% of Fortune 500 companies have deployed iOS devices to some extent, overall tablet penetration in the enterprise market remains surprisingly low at just 20%. Cook hopes to get that figure to 60% in the years ahead.

At the same time, tackling the enterprise market is also Microsoft territory. Microsoft’s presence in the tablet market depends on who you ask since different researchers define tablets differently and Microsoft has blurred the lines between form factors. But the company did just launch Windows 10, the realization of a long-standing vision where one operating system would rule all form factors.

Still, a rising tide would lift all enterprise tablet vendors.

Evan Niu, CFA owns shares of Apple.

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Something Unimaginable Is Happening in the Gadgets Market

gadget
Jeffrey Coolidge—Getty Images Circle of Technology

We're spending less for the first time in years

The global love affair with gadgets isn’t dying, not by a long shot. But a new study indicates that our infatuation with shiny new electronic devices appears to be hitting a plateau.

This week, the IT research firm Gartner released a forecast predicting that for the first time since 2010, there will be a worldwide decline in money spent on gadgets. Globally, the anticipation is that consumers will collectively spend $606 billion on PCs, laptops, tablets, and mobile phones in 2015. That would represent a 5.7% decline from 2014.

The decrease in spending isn’t because we’re buying fewer mobile phones. In fact, mobile phone purchases are expected to be up for the year: 1.94 billion, versus 1.879 billion in 2014. Yet mobile phone prices continue to fall. So even as we buy more, the dollars collected on those sales aren’t as high as one might expect.

The Gartner forecast does call for a net decrease in the sales of tablets and desktop and laptop computers. In particular, PC purchases in western Europe, Russia, and Japan have been falling, “largely due to price increases resulting from local currency devaluation against the dollar,” Gartner research director Ranjit Atwal said in a press release.

Looking forward, Gartner is forecasting that the number of mobile phones and tablets sold will rise globally in 2016 and 2017, while purchases of PCs and laptops will keep declining. Total dollars spent on gadgets are expected to rise in 2016 and again 2017 as well. Even so, the anticipated sum of global gadget purchases in 2017 won’t match the total from 2014—$627 billion versus $642 billion, respectively.

TIME Microsoft

Microsoft Announces Windows 10 Release Date

It’s coming very soon

Microsoft will launch Windows 10 on July 29th. The technology giant had previously promised to release the next version of its computer operating system sometime this summer. That date represents aggressive timing for a company that has, at times, had difficult launches for major products. The Redmond, Washington-based company has been releasing increasingly polished preview builds of the software over the past few months.

Windows 10 will be available as a free upgrade for users of Windows 7 and Windows 8.1. To publicize that, the company is making a small notification appear in users’ task bars. Clicking on the notification, pops up a slide show extolling the benefits of Windows 10. Some of the new features include: the return of the Start menu, an all-new Internet browser, and Cortana, a digital personal assistant making to Google Now or Apple’s Siri.

From Microsoft’s release:

With Windows 10, we start delivering on our vision of more personal computing, defined by trust in how we protect and respect your personal information, mobility of the experience across your devices, and natural interactions with your Windows devices, including speech, touch, ink, and holograms. We designed Windows 10 to run our broadest device family ever, including Windows PCs, Windows tablets, Windows phones, Windows for the Internet of Things, Microsoft Surface Hub, Xbox One and Microsoft HoloLens—all working together

TIME Apple

Apple’s About to Completely Change the Way You Use an iPad

Inside A SoftBank Store As Apple Inc. New iPads Go On Sale
Yuriko Nakao—Bloomberg/Getty Images Apple Inc.'s new iPad Air 2 tablet is displayed at a SoftBank Corp. store in the Ginza district of Tokyo, Japan, on Friday, Oct. 24, 2014.

Get ready for some serious multitasking

Apple is reportedly working on a drastic redesign for the iPad, enlarging the screen to 12 inches and introducing a new split-screen mode that could display two apps at once.

The split-screen feature was reportedly developed to take advantage of the larger, 12-inch screens on two new iPads, codenamed “J98″ and “J99,” sources within the company tell 9to5Mac.

While Apple has not officially announced the super-sized iPads, the company is reportedly considering a debut of the split-screen feature at Apple’s Worldwide Developer’s Conference this June. The feature will reportedly divide the screen down the middle or in thirds, enabling users to multitask across apps, so that they no longer have to toggle between a web browser or email. The splitscreen effect is similar to a feature offered on some Android-powered tablets.

The redesigns come amid a slump in iPad sales, as consumers shift purchases toward large screen smartphones, or “phablets.”

TIME Tablets

‘Several Dozen’ Flights Grounded Because of iPad Software Glitch

Shared Jet Sales Soar as Rich Fliers Avoid Airline Hassles
Scott Eells—Bloomberg/Getty Images A helicopter pilot looks at his flight plan on an Apple Inc. ipad over Weehawken, New Jersey, U.S., on Wednesday, Aug. 10, 2011.

Pilots announce delays after the iPads they use to access flight records simultaneously went blank

Dozens of American Airlines flights were delayed Tuesday evening after the iPad software its pilots use to access flight plans suddenly went blank.

American Airlines confirmed the software glitch on Twitter. An airline spokesperson later said the glitch had stalled “several dozen” flights, Quartz reports.

Stranded passengers in Chicago and Dallas also tweeted about the glitch.

American Airlines digitized its flight plans in 2013, replacing weighty paper-based tomes with Apple’s popular mobile tablet. The software in question is made by Jeppesen, a Boeing-owned company that specializes in aviation navigation and logistics products.

TIME Internet

Kindergarteners Who Share iPads May Perform Better: Study

485205387
Getty Images

Students perform better if they share an iPad with another student as opposed to having one all to themselves, according to a new study.

Though schools nationwide have ramped up their efforts to introduce technology in the classroom, there’s just a small body of evidence on the benefits for students. Now a new study suggests that iPads do have a role in academic performance, but the effect may be greater when students collaborate.

In the study, Northwestern University researcher and Ph.D. candidate Courtney Blackwell analyzed the iPad usage and academic performance of 352 kindergarten students in three elementary schools. In one of the schools, there were enough iPads for every student to use one. In another school, there were 23 iPads and the students shared them. In the third school, there were no iPads. Blackwell followed the students for one school year and tracked their performance on literacy tests.

Her findings, which Blackwell presented at the Annual Conference of the International Communication Association, show that students who shared iPads performed better than their peers who used an iPad on their own or did not use iPads at all in the classroom. Specifically, kids who shared iPads scored 28% better on their literacy tests at the end of the year, whereas kids who used their own devices improved by 24% and kids who did not have iPads in the classroom improved by 20%.

“While statistically significant, the percentage increase for the shared-iPad kids is not huge, but I do think it is a meaningful finding given there is no prior empirical research looking at how 1:1 tablets affect student learning compared to shared or no tablets,” said Blackwell in an email to TIME.

In her report, Blackwell concludes that schools may want to reconsider implementing tablet use for young kids, given how expensive the investment can be and the lack of evidence to support the need for individual tablets in kindergarten.

“I think it’s important to remember that iPads and technology in general are just one part of the curriculum, with many other factors playing a role in children’s achievement,” said Blackwell. “Technology has always been touted as a potential panacea for education, but historically it has never changed the U.S. education system on a large scale. That said, with so many schools integrating one-for-one tablets and other devices, we need to know how technology is affecting learning to understand the best way to make tablets and technology most effective for students and teachers.”

Read next: Teachers Actually Want Students to Use This App in Class

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TIME Video Games

8 More Fascinating Things Nintendo CEO Satoru Iwata Told TIME

Nintendo President Satoru Iwata And DeNA President Isao Moriyasu Joint News Conference As The Companies Form Capital Alliance
Akio Kon—Bloomberg/Getty Images Nintendo President and CEO Satoru Iwata, left, speaks while DeNA Co. President and CEO Isao Moriyasu listens during a joint news conference in Tokyo, Japan, on March 17, 2015.

Why he hates the term "free-to-play" and why the New 3DS almost didn't make it to market on time

Last week, Nintendo President and CEO Satoru Iwata spoke exclusively to TIME about the company’s plans to develop games for smart devices, sluggish Wii U sales, rumors of a live action Netflix Zelda series and why a last-minute feature for the company’s New 3DS games handheld nearly sabotaged its debut.

Here’s the rest of that interview’s takeaways in Iwata’s own words.

Nintendo’s plans to develop games for smart devices is still about bringing different generations of players together

“One thing that we have found over the years is that video games themselves have a tendency to be difficult to break out of a particular segment,” says Iwata. “But what we have found with some of our most successful products, is that they tend to be ones where people are playing them together and the communication is spreading much more broadly and easily than standard word of mouth communication. And what you start to see is people of different generations playing together and talking with each other, and sometimes you even see grandchildren talking with their grandparents about a video game.”

“So with the plans for our smart device efforts, that will also take on this theme of giving people opportunities to learn from one another about games, and giving games an opportunity to spread across different generations of people, and give people more opportunity to communicate with one another about games,” explains Iwata. “And I want to say that we’re going to be putting forth some effort to be able to provide some factual data that supports these viewpoints.”

Iwata thinks Nintendo can overcome free-to-play’s stigmas

“I do not like to use the term ‘Free-to-play,'” says Iwata. “I have come to realize that there is a degree of insincerity to consumers with this terminology, since so-called ‘Free-to-play’ should be referred to more accurately as ‘Free-to-start.'”

“The thing that concerns me most is that, in the digital age, if we fail to make efforts to maintain the value of our content, there is the high possibility for the value to be greatly reduced as the history of the music industry has shown,” he continues. “On the other hand, I have no intention to deny the Free-to-start model. In fact, depending on how we approach this model, we may be able to overcome these problems.”

But Iwata doesn’t view free-to-play as a progressive development

“I do not believe it is an either-or situation between Free-to-start and packaged game retail business models,” argues Iwata. “There are games which are more suited for the Free-to-start model. We can flexibly choose between both revenue systems depending on the software content.”

“However, because there are games or types of games which are suited for the existing package model, and because there are consumers who appreciate and support them, I have to say that it is a one-sided claim to suggest that a complete transition to a Free-to-start model should be made because the existing retail model is outdated.”

Nintendo was “forced” to sell the Wii U at a higher cost than it might have otherwise

“I think, to be honest, we were in a difficult situation,” says Iwata. “Because for the home console our biggest market opportunity was in the overseas markets in the U.S. and Europe, but because of the valuation of the yen and the exchange rates into dollars and euro, it made it a difficult proposition for us to capitalize on that, because of the cost that we were forced to sell the system at.”

The New 3DS’ “Super-Stable 3D” feature nearly torpedoed Nintendo’s latest games handheld

Nintendo’s New 3DS (reviewed here) employs a special eye-tracking sensor that improves the way the handheld conveys its eponymous 3D trick. But according to Iwata, the feature emerged as the device was about to head into production, prompting an eleventh hour scramble.

“I think you’re probably familiar with the tales of how, in the late stages of development, Mr. Miyamoto always upends the tea table,” said Iwata. “So a similar thing happened this time. The hardware developers had designed a piece of hardware that they felt was at the final stage of prototyping, and they were bringing it to us for approval to begin moving forward with plans for manufacturing. But Mr. Miyamoto had seen that super-stable 3D just one week before, and he asked “Why aren’t we putting that in this system? If we don’t put this in it, there’s no point in making the system.”

Iwata says he was personally asked many times by his internal engineers, “Are we really going to do this?”

“But Nintendo is a company of Kyoto craftsman, and what we don’t want to do, is if we know we can make something better, we don’t want to leave that behind,” he explains. “So we were able to bring the super-stable 3D to reality by looking technically at what we can do to solve those challenges and finding those steps along the way to make it happen. This is where my background in technology is quite helpful, because it means that the engineers can’t trick me.”

Iwata doesn’t see Amiibo as a Skylanders or Disney Infinity clone

“At first glance it may look like we’re a trend follower with amiibo,” says Iwata. “But really what we’re doing is, we have introduced amiibo in a way that is new and where amiibo do things in our games that they can’t do anywhere else. From that perspective, we feel that we are a trendsetter.”

“It’s true that if you go into a retail store, and you see the retail shelves, that from a retail perspective, we’re leveraging the structure that’s in place for how the toys to life category is being sold. That’s a hurdle that’s hard to overcome in terms of differentiation. But in terms of how the amiibo are used in games, we do feel that we are taking the lead in terms of broadening what toys to life can be.”

And the Smash Bros. characters have been toys all along

“What’s interesting about the Smash Bros. games, is that the Smash Bros. games do not represent the Nintendo characters fighting against one another, they actually represent toys of Nintendo characters getting into an imaginary battle amongst themselves,” explains Iwata. “And frankly that has to do with a very serious debate that we had within the company back then, which was, ‘Is it really okay for Nintendo characters to be hitting other Nintendo characters? Is it okay for Mario to be hitting Pikachu?'”

That story about a new live action series Zelda series coming to Netflix in Japan may not be accurate

In early February, the Wall Street Journal reported that Netflix was developing a live-action series based on Nintendo’s Legend of Zelda franchise. But Mr. Iwata says those rumors are inaccurate.

“As of now, I have nothing new to share with you in regard to the use of our IPs for any TV shows or films, but I can at least confirm that the article in question is not based on correct information,” says Iwata.

Read next: Exclusive: Nintendo CEO Reveals Plans for Smartphones

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TIME Video Games

Exclusive: Inside Nintendo’s Bold Plan to Stay Vibrant for the Next 125 Years

Nintendo President Satoru Iwata Earnings News Conference
Yuzuru Yoshikawa—Bloomberg/Getty Images Nintendo President and CEO Satoru Iwata speaks during a news conference in Osaka, Japan, on Oct. 29, 2014.

The company's CEO tells TIME Nintendo's historic engine is far from stalled

In late 2013, Satoru Iwata sat alone on a bullet train headed toward Tokyo. As the carriage sped silently down the track, Iwata, the puckish CEO of Nintendo, began sketching out a new idea: a line of physical toys with built-in chips that connected wirelessly to the company’s varied game systems. The toys would let Nintendo trade on its universe of characters like Mario and Donkey Kong while generating new sales.

Iwata, a 55-year-old who dresses in three-piece suits and speaks in measured phrases, often pausing to chuckle, says he got more and more excited as he mulled the concept. He dashed off a four-page pitch to his engineers. “It was something I believed would be completely new for us,” he recalls. The result was an array of figurines dubbed Amiibo (Japanese wordplay meant to evoke friends playing together), which launched worldwide a little less than a year later and turned out to be a hit. Nintendo says it sold nearly 6 million figurines, which go for about $13 each, by the end of 2014.

Amiibo was a badly needed success for Nintendo—but one that underscores the difficult position the video-game pioneer finds itself in. The company that generated enormous profits in the 1990s and 2000s by introducing innovations in game controls and forcing rivals to adopt its ideas now at times follows in the footsteps of the competition. The gamemaker Activision has been selling similar toys since 2011, grossing nearly $3 billion. Disney, meanwhile, has its own version, based on movie characters such as Buzz Lightyear and Captain Jack Sparrow.

Nintendo has been struggling for years. Wii U, the successor to the wildly popular Wii, has sold just under 10 million units since its launch in 2012. (From 2006 to 2014, Nintendo sold more than 100 million Wiis. And Microsoft and Sony, which launched competing systems after Wii U, have both outsold it.) Last summer, Nintendo laid off over 300 employees in Europe. And the company’s return to modest profitability late last year, thanks in part to a weaker yen, materialized after three consecutive years of losses. Nintendo’s critics have been relentless in demanding that the company abandon its hardware business and make versions of its games for smartphones and tablets.

MORE Exclusive: Nintendo CEO Reveals Plans for Smartphones

On March 17, Iwata announced what many—including Nintendo’s own executives—long thought impossible: the company will begin making games for mobile devices. Nintendo is striking a partnership with Japanese mobile gaming giant DeNA to establish a smart device gaming platform to be introduced this fall. The alliance includes a cross-shareholding agreement: Nintendo is buying a 10% stake in DeNA for $182 million; DeNA is acquiring a 1.24% stake in Nintendo for the same amount.

It’s not hard to see why Nintendo is reversing course now. Research firm Gartner reported global smartphone and tablet sales of over 1.4 billion units in 2014. By contrast, the two best-selling video-game systems of all time—Sony’s PlayStation 2 console and Nintendo’s DS handheld—each took nearly a decade to sell 150 million units. Meanwhile, smartphone gamemakers like King (Candy Crush) and Rovio (Angry Birds) are now worth billions. And mobile knockoffs of 1980s classics have turned into overnight hits (see: Crossy Road and Flappy Bird), while Mario, Luigi and friends have not yet been found on a phone.

Why now? “In the digital world, content has the tendency to lose value, especially on smart devices,” Iwata tells TIME exclusively. “We finally found solutions to the problem. We will not merely port games developed for our dedicated systems to smart devices just as they are—we will develop brand new software which perfectly matches the play style and control mechanisms of smart devices.” The ultimate goal: to drive tablet and phone users to Nintendo’s hardware such that they “eventually become fans of our dedicated systems.”

Nintendo’s senior leaders rarely talk publicly about internal strategy. But the company’s top three executives recently agreed to speak with TIME and insisted that Nintendo is not out of big ideas. (Please click here for full Q&As with Iwata and Miyamoto.) The about-face on mobile devices is just one example, they argue. The firm is busily retooling to create new products, like Amiibo and its new 3DS handheld, released in February, more quickly. And Nintendo is opening up by broadcasting presentations—sometimes serious, sometimes silly—directly to its fans to combat a reputation for flat-footedness. All of these moves are part of a company-wide effort to reinvigorate the Japanese icon.

Not on the agenda: abandoning hardware. In addition to its revised mobile strategy, details on a new Nintendo platform codenamed “NX” are due next year. Iwata argues that pressure to get out of that business has always reflected a deep misunderstanding of the company’s approach to innovation. “We view it as that marriage of the software with the hardware that together creates a compelling experience,” says Reggie Fils-Aimé, Nintendo of America’s president. Iwata concurs, explaining that dropping out of hardware would cripple the company. “If we don’t take an approach that looks holistically at the form a video-game platform should take in the future,” he says, “then we’re not able to sustain Nintendo 10 years down the road.”

Humble Origins
Nintendo is a much older company than its signature candy-colored protagonists suggest. Founded in Kyoto in 1889 by artist turned entrepreneur Fusajiro Yamauchi, the company began as a manufacturer of handcrafted playing cards. The Nintendo most people know was born in 1966. That’s when Hiroshi Yamauchi, the firm’s longest-serving president (from 1950 to 2002), greenlighted a gadget that employed crisscross slats and a scissors-like handle to make an extensible arm. It sold millions of units and paved the way for a series of quirky playthings that included early electronic games in the 1970s.

More recently, the company has been run as a creative troika, with Iwata at the top and presidents in both Europe (Satoru Shibata) and North America (Fils-Aimé). Shigeru Miyamoto, the storied creator of Donkey Kong, Mario and Zelda, is the company’s creative genius and currently the general manager of its R&D division.

MORE Exclusive: 7 Brilliant Insights from Nintendo’s Gaming Genius Shigeru Miyamoto

That division’s approach to game design can sound counterintuitive. Conventional wisdom holds that consumer-electronics manufacturers should first design a game system, then lure third-party software developers to furnish it with hits. Nintendo says it does the opposite: it experiments until it finds something its existing systems can’t do—motion sensors in the case of the Wii, or a touchscreen for the Wii U—then makes the hardware to support it. “Our job is to continue to create new platforms that enable us to create fun new ways to play,” says Miyamoto.

Mobile games will present a new set of challenges for the company. Many of that market’s biggest hits are initially free to download but generate enormous sales by constantly prompting users to pay small amounts for in-game items. Iwata says this doesn’t track with Nintendo’s identity. “Nintendo does not intend to choose payment methods that may hurt Nintendo’s brand image or our intellectual property,” he says. That doesn’t mean so-called micro-transactions are entirely out of the question, however. The company will decide which payment system to employ depending on the title, Iwata says. He adds: “It’s even more important for us to consider how we can get as many people around the world as possible to play Nintendo smart device apps, rather than to consider which payment system will earn the most money.”

How the firm deploys its vast library of beloved characters is another major decision. Nintendo says this stable of characters will be an asset as it enters a new, rapidly changing market. It plans to develop multiple titles simultaneously. “We would like to create several hit titles by effectively leveraging the appeal of Nintendo IP,” Iwata explains.

Nintendo’s executives are adamant that creating dedicated hardware is a core part of its creative process. That is why the announcement of new mobile titles coincided with the announcement of a new platform, the NX. “For us to create unique experiences that other companies cannot, the best possible option for us is to be able to develop hardware that can realize unique software experiences,” explains Iwata.

And, Iwata argues, there is a symbiotic relationship between the world’s iPhones and Android devices and Nintendo-made hardware. “Even before the advent of smart devices, we employed touchscreens for our games with Nintendo DS, and we also adopted accelerometers for our Wii Remotes faster than smart devices did,” he explains. “By utilizing our unique know-how in areas like these, I believe we will be able to come up with unique propositions for consumers.” Nintendo is planning to elaborate on how exactly this will work for specific titles over the coming months.

For now, Nintendo’s biggest seller remains its 3DS, a handheld successor to the Game Boy introduced in 2011. It is designed to appeal to all ages but is most popular among younger players. That’s partly about parents. In a world flush with smartdevices that can tap the entire Internet—­including unsavory fare—Nintendo’s handhelds are relative walled gardens of controversy-free content. The 3DS can go online, but only if parents have set the device’s privacy controls to allow it.

Internet-connectivity aside, the 3DS is like an iPhone on steroids. It’s kitted with two screens, one of which is touch-­sensitive; dual cameras for use by games or for taking pictures; and Wii-like motion sensors. It displays images that appear three-dimensional without having the player use special 3-D glasses. The latest version, the prosaically named New Nintendo 3DS ($199), takes the concept further by using advanced eye-tracking techniques to improve the 3-D effect.

The company says the newest model is one example of how Nintendo will conduct itself going forward. Late into the development of the system, Nintendo met with a company that had the technology capable of improving its 3-D, which in previous versions had been knocked for not always working well. After previewing the technology, Miyamoto stunned his engineers. “He said, ‘Why aren’t we putting that in this system? If we don’t put this in, there’s no point in making the system,’” recalls Iwata.

In times past, Nintendo might not have upended its plans at the final hour to make complex technical changes. “I was personally asked many times by many engineers internally, ‘Are we really going to do this?’” says Iwata, who began his career as a programmer. “This is where my background in technology is quite helpful, because it means the engineers can’t trick me.”

The feature, dubbed “super-stable 3-D” by Nintendo’s marketing wing, is now seen as indispensable to the handheld’s overhaul. New Nintendo 3DS has rallied sales relatively late in the platform’s life cycle, giving the company a much-needed boost.

Next Phase
On balance, Nintendo’s methods have reaped more hits than misses. But the misses have been consistent and significant. Nintendo’s Virtual Boy, the company’s way-early shot at a virtual-reality gaming system in 1995, was a commercial disaster. The first “PlayStation” was supposed to be a Sony-manufactured add-on for Super Nintendo, but Sony and Nintendo couldn’t come to terms on a deal, spurring Sony to become a major competitor. And yet flights of fancy have ultimately proved to be Nintendo’s chief strength over the years. The Wii—with its motion-detecting controllers that had players swing invisible tennis rackets—seemed like a bizarre concept when it was unveiled in late 2006.

The comparatively weak response to the Wii U isn’t lost on Iwata. “Certainly I’m not satisfied with the current situation,” he says. “It may not be [people’s] first console of choice, but they recognize it as perhaps the best second console,” he adds. In truth, the Wii U may turn out to be a placeholder. “I think they’ve bought themselves time to figure out what that next monumental step forward is,” says Digital World Research analyst P.J. McNealy. Adds Yves Guillemot, CEO of games publisher Ubisoft: “The challenge for Nintendo now is to make sure their hardware continues to be convincing enough for people to buy.” Guillemot is confident the company can do that.

MORE Exclusive: Nintendo CEO Reveals Plans for Smartphones

Dan Adelman, a Nintendo executive from 2005 to 2014 who is now a games-­industry consultant, says the firm “is already making the best games of any publisher out there.” Compared with those of other publishers, Nintendo’s games consistently earn top marks from critics. But Adelman says the company must continue to aggressively streamline its bureaucracy. “With Nintendo, I honestly can’t tell you what they’re going to do,” explains David D’Angelo, of Yacht Club Games, which released its title Shovel Knight for the company’s systems. “I could think about it all day, every day for a year, and it’ll still surprise me when it comes out, whatever wacky gameplay thing they think they should be pushing next.”

That leaves Nintendo rethinking its approach to the very industry it helped define. “I have never intended to dismiss the entertainment experiences that people are enjoying on smart devices or any other media,” Iwata says. “On the other hand, my understanding is that, on smart devices, the main demand is for very accessible games which smart device users can easily start and easily finish. These are not necessarily the characteristics that people demand from games for dedicated video game systems.”

As the company embarks on a strategy that straddles its traditional mode of innovation with the fast-changing world of mobile technology, there are likely to be more questions than answers. “We do have doubts [about] continuing to extend our business in the way that we have in the past,” admits Iwata. “We have doubts about whether or not people will continue to see those simple extensions of what we’ve done as new and surprising.” Fixing that will require entirely fresh ideas that can cut through the noise created by so many competing platforms. “If it takes a lot of explanation for people to understand your entertainment product,” says Iwata, “you’re doing something wrong.”

Read next: Exclusive: Nintendo CEO Reveals Plans for Smartphones

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TIME Video Games

Exclusive: Nintendo CEO Reveals Plans for Smartphones

Nintendo's CEO takes TIME inside the company's surprise decision to put its historic video game franchises on smartphones and tablets

It’s official: Mario, Donkey Kong and Zelda will appear on smartphones and tablets at last—and that’s just the start. Nintendo President and CEO Satoru Iwata spoke exclusively to TIME about the company’s plans to bring its franchises to smart devices, why it’s chosen to do so now, and what it means for the future of its reputation as a manufacturer of idiosyncratic console and handheld game systems.

What prompted this move now, in the light of all you’ve said about Nintendo’s reluctance to craft games for smartphones?

In the digital world, content has the tendency to lose value, and especially on smart devices, we recognize that it is challenging to maintain the value of our content. It is because of this recognition that we have maintained our careful stance. However, we have been seriously and continuously considering how we should make use of smart devices. We made the announcement yesterday because we finally found solutions to the problems we identified. More specifically, we will not merely port games developed for our dedicated game systems to smart devices just as they are—we will develop brand new software which perfectly matches the play style and control mechanisms of smart devices.

We have come to the stage where we can say that we will be able to develop and operate software which, in the end, will not hurt the value of Nintendo IP but, rather, will become an opportunity for the great number of people around the world who own smart devices—but do not have interest in dedicated video game hardware—to be interested in Nintendo IP and eventually to become fans of our dedicated game systems. Yesterday, we finally came to the stage where we were able to announce the alliance with DeNA, which plays a key role in these solutions.

MORE Exclusive: Inside Nintendo’s Bold Plan to Stay Alive for the Next 125 Years

Will you pursue a premium strategy where you charge users up front for games? Or will you offer free-to-play and try to capitalize on in-app purchases?

I understand that, unlike the package model for dedicated game systems, the free-to-start type of business model is more widely adopted for games on smart devices, and the free-to-start model will naturally be an option for us to consider. On the other hand, even in the world of smart device apps, the business model continues to change. Accordingly, for each title, we will discuss with DeNA and decide the most appropriate payment method. So, specifically to your question, both can be options, and if a new Nintendo-like invention comes of it, then all the better.

On the other hand, Nintendo does not intend to choose payment methods that may hurt Nintendo’s brand image or our IP, which parents feel comfortable letting their children play with. Also, it’s even more important for us to consider how we can get as many people around the world as possible to play Nintendo smart device apps, rather than to consider which payment system will earn the most money.

Will Nintendo or DeNA be developing these games? And is Mr. Miyamoto [creator of Mario, Donkey Kong, Zelda and other iconic Nintendo franchises] working on anything smart device-related?

Development of smart device games will be mainly done by Nintendo, but it is significant that we are forming a joint development structure with DeNA. Nintendo, through experience in the dedicated game system business, is good at making traditional game products. But for smart devices, in addition to the “product” aspect of a game, the aspect of an ever-evolving “service” is very important—a service that encourages consumers to play every day even for a short time. DeNA has extensive know-how in developing the “service” side of things, and will be primarily responsible for the service-oriented operations. We will be able to greatly leverage strengths of each party.

As for any involvement of Mr. Miyamoto, we will discuss it when possible, but for now, understand that his priority is on the development of Wii U titles that will be launched this year.

What else can you tell us about the new “online membership service” you’ve announced with DeNA? Is it meant to supersede your existing online services on 3DS and Wii U, or operate alongside them?

We are planning to start a new membership service, which can be deployed on multiple devices, such as Nintendo’s game systems, smart devices and PCs starting from the fall of this year, to be jointly developed with DeNA. While this is going to be Nintendo’s membership service that we operate, because DeNA has impeccable know-how in system development across multiple devices, as well as in the construction of networks and servers, we are planning to develop a new membership service that can take advantage of both companies. Regarding details, please wait for our further announcements.

The implication from previous statements is that Nintendo still views its platforms as superior, from a gaming standpoint, to smart devices. Are you hoping to leverage the smart device market as a gateway to dedicated Nintendo systems? Will Nintendo’s games on smart devices have gameplay or feature hooks into Wii U or 3DS games?

For us to create unique experiences that other companies cannot, the best possible option for us is to be able to develop hardware that can realize unique software experiences. As a result, we can offer our consumers overwhelming entertainment experiences—immersion into game worlds. This is why I used the term “premium.”

Let me explain so that nobody will misunderstand: I have never intended to dismiss the entertainment experiences that people are enjoying on smart devices or any other media. On the other hand, my understanding is that, on smart devices, the main demand is for very accessible games which smart device users can easily start and easily finish. These are not necessarily the characteristics that people demand from games for dedicated video game systems. Actually, this is one of the reasons why we believe that we should not port games for dedicated game systems to smart devices just as they are because doing so will not fully satisfy the needs of the smart device consumers. In other words, even when multiple systems can run games, I believe the entertainment experiences that the consumers demand vary from system to system.

In the Nintendo philosophy that I just mentioned, being “unique” or “unprecedented” is appreciated far more than being “better” than the others. While we want more people to become familiar with Nintendo IP through Nintendo’s smart device game apps, at the same time, we aim to provide smart device consumers with unique experiences with our game apps. From a business perspective as well, we aim to grow our smart device business into an important business field.

How will Nintendo design those unique experiences in the smart device space when you’re now forced to accommodate a hardware interface you didn’t design?

Indeed, the late Mr. Yamauchi, former president of Nintendo, often told us that in the world of entertainment we have to do things differently than others. That philosophy has been passed down to us. For us to be able to do something unique that is different from others, being able to design the hardware in order to create unique software experiences gives us the best option. As I said, Nintendo will continue its dedicated video game system business with an even stronger passion.

MORE Exclusive: 7 Brilliant Insights from Nintendo’s Gaming Genius Shigeru Miyamoto

On the other hand, we believe that we will be able to use smart devices in a very unique way so that they can be a bridge to our dedicated game systems, and at the same time, that we will be able to deliver unique experiences to the users of smart devices. As you know, even before the advent of smart devices, we employed touchscreens for our games with Nintendo DS, and we also adopted accelerometers for our Wii Remotes faster than smart devices did, and produced unique games. By utilizing our unique know-how in areas like these, I believe we will be able to come up with unique propositions for consumers. Please wait for our further announcements when we can elaborate on specific titles.

What do mobile game makers get wrong now that Nintendo will get right?

Most mobile game makers who have yielded tangible business results appear to be dependent on a single hit title. For Nintendo, being able to make use of the enormous IP library that we have carefully nurtured for more than 30 years is a major strength. We would like to create several hit titles simultaneously by effectively leveraging the appeal of Nintendo IP, which many people around the world are familiar with.

On the other hand, as I said during our telephone interview, the value of content generally tends to weaken in the digital world, and especially on smart devices, it is not easy to maintain the value of content. We aim to explore ways where we will not devalue Nintendo IP and, rather, we can further improve the value.

Mobile gaming is still the wild west, are there things Nintendo will never do?

The answer may overlap with my previous one, but we will not do anything that may hurt Nintendo IP. We will not do anything that may hurt Nintendo’s brand image—that parents can feel safe giving their children access to it.

You also just announced “NX,” something you described as a platform that’s “a brand new concept.” Can you confirm whether this is indeed hardware, and what it’s intended to follow system-wise?

The reason why I announced “NX,” which by the way, is not directly related to our alliance with DeNA, was because I wanted to avoid any misunderstandings such as, “Nintendo might have lost its passion for the dedicated game system business,” and because I wanted many people to understand that Nintendo will continue its dedicated game system business with even stronger passion and motivation. I am sorry, but as I said during the press conference yesterday, we cannot make any further announcements about “NX” until next year.

Read next: Exclusive: Inside Nintendo’s Bold Plan to Stay Alive for the Next 125 Years

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You Won’t Get Your Hands on Apple’s Giant iPad Any Time Soon

Apple iPad Tablet Suppliers
Justin Sullivan—Getty Images Apple CEO Tim Cook holds the new iPad Air 2 during a special event on Oct. 16, 2014 in Cupertino, Calif.

Apple has reportedly told suppliers to delay until the second half of 2015

Bad news for those awaiting Apple’s rumored 12.9-inch iPad — you’ll have to wait even longer.

Apple has told suppliers to delay the iPad’s mass production from the first quarter of 2015 to the second half of the year, the Wall Street Journal reported Thursday, citing people familiar with the matter. Apple hasn’t officially announced the bigger iPad, which would be its largest ever, but several leaks from the supply chain have suggested since last fall that the “iPad Air Plus” or “iPad Pro” is in the works.

The delay will reportedly allow Apple more time to finalize the iPad’s design, which may include USB ports and better synchronization software as Apple tries to break into the fast-growing enterprise market.

Apple’s tablet sales have struggled lately, with 2014 marking the first year in which worldwide iPad shipments declined, according to a report by IDC. But it’s not just Apple: the global tablet market has seen a “massive deceleration” in growth as big-screen smartphones cannibalize tablet sales, IDC said. In other words, the number of tablets shipped worldwide is still going up—but less and less each year.

Here’s a closer look at IDC’s tablet market forecast:

iCharts

[WSJ]

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