A Switch successor looms as Nintendo cuts forecasts

The Nintendo Switch is on the downturn. What might the next one look like?

Welcome back to Multicore.

Today's update is about Nintendo, which is one of my favourite companies to cover because its hardware strategy is so different to each of its competitors. Nintendo's quarterly earnings came out today, and I've been wondering about this release ever since an unusual news story came out last month.

Bloomberg reported on January 20th that even though last quarter Nintendo cut its estimate for full-year Switch hardware shipments from 21 to 19 million units, it actually thought it could get to 21 million after all, and will also increase production in the next fiscal year (starting April 1st).

This would be odd, to say the least. Switch sales have been tracking down over the past couple of years — partly due to the supply chain crunch, but also because it's just at that point in its life cycle, having been released nearly six years ago. For Nintendo to reach 21 million units this year, with just 8.28 million shipped in the first six months so far, would likely require a record October-December Q3 out of nowhere.

Nintendo is not known for altering its forecasts on a whim. I'll never forget when the company steadily insisted throughout 2013 that it'd ship 9 million Wii U consoles and turn 100 billion yen in profit that financial year, despite both figures increasingly looking like practical impossibilities, then coming out after the holiday quarter and saying actually no, it'll ship 2.8 million consoles and lose 35 billion yen. Things have tended to be tethered more closely to reality since then.

Anyway, did Nintendo end up adjusting its Switch sales forecast after today's earnings? Well, yes — but down, not up.

Read on for what to expect from the Switch from now on, and what I'm thinking about its eventual successor.