Nintendo just released a trailer for its next-generation console, which finally has a name: the Nintendo Switch. Check out the trailer below:

After the phenomenal success of the Wii, Nintendo still has around $10 billion of cash reserves in the bank. However, the company's failure to convince customers of the capabilities and values of the follow-up system, the Wii U, led to its being a bit of a flop.

The Nintendo Switch appears to be a change in direction for the company, with more of a focus on hardware quality, game play, and individual gaming than the family-friendly consoles of previous generations.

Here are a couple of things we can determine about not only the Switch hardware, but also Nintendo's intended innovation route:

  1. The console, as long rumored by leaked specs in previous months, consists of a tablet-style gaming unit with two detachable controllers on either side. These controllers can be used while connected to or separated from the device, and appear to have movement-sensing capabilities similar to those in the Wii. These controllers, according to the Verge, are called Joy Con.
  2. The screen can also be used in a multiplayer mode, with several people each using a single controller while sharing a single screen or multiple screens.
  3. The system will be powered by a custom graphics system by Nvidia, based on the Tegra X2 architecture. Exact performance expectations have not been outlined, but some industry analysis suggests the chip may be capable of graphics more powerful than those of a PlayStation 3, but less than a PlayStation 4's. It is also possible that performance may be different when the unit is plugged into its base station and connected to a large TV for higher resolutions, compared with the lower resolutions used for efficiency when operating off a battery.
  4. Games for the system will be loaded onto custom cartridges, like with older Nintendo mobile systems. No news yet on whether games will also be downloadable.
  5. Nintendo appears to have a very specific target market, as shown in the video: young adults. Whether they are on the sofa, going to a rooftop bar, or playing basketball, the users shown are in their 20s or so. This is important to note as it gives us some insight into the intended market, which could be gadget-hungry Millennials who want to stay at the forefront of technology, and this might also indicate that the Switch, which looks significantly more high-end and component-heavy than Nintendo's previous consoles, will be much more expensive than the previous systems. This is a distinct shift from the company's previous innovation strategies for consoles.
  6. Nintendo also probably learned a lesson from the failure of the Wii U. While the Wii appealed to families because of its simplicity and low price, these same consumers, Nintendo quickly found out, were less likely to upgrade to a newer version of the system, resulting in the terrible sales of the Wii U. Nintendo therefore most likely is shifting its focus from families (where the market may be saturated) toward gadget-hungry individuals.

If you want my take on it, I think the system will sink or swim depending on the hardware cost to Nintendo and therefore the system's profitability. If the company is lucky, demand for its smartphone processors will quickly help drive down the cost of Nvidia chips, but this is still to be seen.

The greater challenge is in convincing the customers of the value of these innovations. Gamers nowadays are more distinctly split between core gamers, who want a powerful system at home (PlayStation 4, Xbox One, or PC), and mobile gamers, who play on their smartphones. Nintendo may end up finding itself in no-man's land between these two camps, with a home console that can't compete with the established brands from Sony and Microsoft, and a large tablet that mobile gamers, happy enough with their phone's performance, won't consider carrying around.

But best of luck to Nintendo. I love Mario Kart and can't wait to see what the company does with the system.