How the Switch has helped Nintendo stock soar this year

JP Mangalindan
Chief Tech Correspondent
Nintendo of America President Reggie Fils-Aimé holds the popular Switch console.

Nintendo (NTDOY) stock is up nearly 38% so far this year. That’s largely because of the new Switch console, which can “switch” from being a home console hooked up to the TV to a standalone handheld device.

Demand is so high for the Switch that Nintendo reportedly doubled production this year from 8 million to 16 million units for 2017. Nintendo announced in April the Switch sold 2.74 million units during its most recent quarter, making the Switch the fastest-selling game system in the company’s history. 

Nintendo’s good fortune also appears to be rubbing off on partners like chipmaker Nvidia (NVDA), which could see a boost to its top line of $300 million-$400 million in fiscal 2018 just from Switch sales. Credit Suisse analyst Seth Sigman estimates GameStop (GME) sold 1.2 million Switches in March and April, spurring a 17% bump in hardware sales for the retailer versus a year ago. Likewise, Best Buy (BBY) and Target (TGT) recently reported an increase in store sales, which they attributed to Nintendo’s console flying off shelves.  

To put things into perspective, Switch sales during its first month on the market were comparable to sales of the gaming giant’s last two consoles, the Wii and Wii U, during the same period. That’s a positive sign, to be sure, but hardly indicative of whether the Switch will be another Wii-like sensation in the long-term or a disappointing dud of Wii U proportions.

The Switch is the console “people love to love”

What the Switch does have going for it, however, is strong, early buzz. Despite some concerns around whether third-party developers will embrace the Switch in droves, the console itself and games like “Zelda: Breath of the Wild” and “Mario Kart 8” earned praise from critics and effusive editorials from just about everyone else. It’s the console “people love to love,” Polygon crooned. An “obsessed” New York Times contributor went one further, calling the Switch the stuff “dreams” are made of.

Over-the-top? Sure. But there’s no denying that even for longtime traditional console gamers like myself, who play the latest cutting-edge games on their PlayStation 4 or Xbox One, the Switch’s ambitious hardware design is downright innovative.

Where Sony (SNE) and Microsoft (MSFT) zigged, Nintendo zagged. Instead of chasing after ever more powerful parts to power ever-sharper graphics, Nintendo focused instead on creating a versatile console that gamers could experience anywhere they wanted: in the living room, the bedroom, on the john, or on the road.

In the Switch, Nintendo finally realized the ambitious vision it had long held for the half-baked Wii U, a console that always suffered from an identity crisis. As a home console, the Wii U woefully underperformed next to competition like the PlayStation 3 and Xbox 360. Its one claim to fame? That big, honking plastic controller and tablet-sized touchscreen, which offered none of the actual benefits of Apple’s iPad — the device it emulated.

Nintendo marketed the Wii U with the gimmick that you could just as easily play a game on the controller’s screen as well as on the TV, switching back and forth as you pleased. Trouble was, the controller was always invisibly tethered to the main Wii U console. Stray more than 30 feet or so away, and the controller became nothing more than a giant chunk of plastic. But with the Switch, Nintendo finally cut that invisible cord.

Detractors will argue the Switch can’t keep up in the graphics department with other current consoles like the PlayStation 4 and Xbox, nevermind upcoming competition such as Microsoft’s Project Scorpio, due out later this year. They’d be right. The Switch will never pump out visuals on par with those pixel-crunching monsters.  

But taken on its own merits, the Switch is capable of some very pretty games, nonetheless. “Zelda” is a breathtaking experience, even for graphics junkies like me — and that’s a launch game. As developers spend more time tinkering with the console, they’ll eek out better visuals and gameplay experiences. Better yet, Switch owners will be able to take those games with them wherever they go.

That’s probably more than good enough for most people, and clearly, Nintendo shareholders agree.

JP Mangalindan is a senior correspondent for Yahoo Finance covering the intersection of tech and business. Follow him on Twitter or Facebook.  

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