Byte of the Apple

Will the iPhone Grab the Lead in Games?


Last week, I got a visit from the CEO of a company that makes games for the iPhone. It was a revelation.

Shervin Pishevar, CEO of Social Gaming Network, showed me a few of the company's titles, including the spy game Agency Wars, a Mafia title, and virtual-pet software called iFluff Friends. Then he showed me an as-yet-untitled game in development. This one puts the iPhone user in the cockpit of a fighter jet. You control the plane and shoot down bad guys by tilting your phone, using the accelerometers inside Apple's (AAPL) handset. Here's the kicker: The enemy planes might be piloted by another iPhone gamer.

The bad-guy planes could be controlled by other users somewhere else in the world playing against you from their iPhones. Not only will you be able to play against your friends, you'll be able to team up with buddies, form your own fighter squadron, and stage dogfights. Imagine sitting in a meeting one afternoon and getting a text message from your squadron mates that you're needed in battle.

Around the same time, I talked to Trip Hawkins, founder of Electronic Arts (ERTS) and current CEO of Digital Chocolate, a mobile-gaming company that has chalked up some 20 million downloads of iPhone games via Apple's iTunes App Store. Hawkins described some concepts his company has in development that would let game characters and virtual goods follow players across several games.

After years of neglecting the Mac as a platform for games, Apple's phone, not its computers, offers the most gaming promise. The iPhone's tech-savvy base of 21 million users is an ideal audience for a new breed of compelling games that should make the device even more compelling. Between the iPhone and the iPod Touch, which can also run the same games, Apple could soon have the best-selling handheld platform on the market.

Developers are whipping up some inventive ideas for new iPhone games. Hawkins asked me to imagine playing Batman as a character in a superhero game, then having him follow when I switch to a baseball game, where the Caped Crusader becomes an incredibly skilled second baseman. In a fantasy-adventure game, Batman becomes a monster-killing warrior who is deft with a battle ax. The same thing could happen with items featured in games. A magic wand in one game might become a sword or a laser gun in the next, Hawkins says.

Eagerly Awaiting New Apple Software

If those scenarios come to fruition, sophisticated gamers might see their diversions less as one-time purchases and more like a hobby or long-term project they nurture over time. A $10 download of one game could lead to a lot more 99¢ purchases to enhance the experience. That kind of in-game purchasing is a new feature coming in the iPhone 3.0 operating system software due later this year.

Gaming is growing into an incredibly powerful force on the iPhone and iPod Touch, and by all accounts it will only become more important and more social with iPhone 3.0, which supports phone-to-phone connections for playing games over the Internet, or at close range via Apple's Bonjour networking technology. Another upcoming feature: in-game voice communications. From the imaginary fighter jet, you'll be able to trash-talk your adversary.

Since the June 2007 release of the first iPhone, Apple has sold more than 21 million units and change, plus 16 million or so iPod Touches, for a total of 37 million and change as of the quarter ended Mar. 28.

A solid summer of iPhone sales, spurred by the release of a new generation of the device and the replacement of many first-generation iPhones, could push iPhone sales north of 35 million units. That's the number of DS handheld game machines that market leader Nintendo (NTDOY) will sell in 2009, according to estimates. Add a likely 10 million iPod Touch units sold this year, and you could have an Apple handheld platform that outsells the DS.

Boost your Apple device forecasts a bit, and the industry could end up with a scenario in which Apple sells a combined 52 million units in 2009. That would be about equal to market researcher iSuppli's estimated sales for both the Nintendo DS and Sony's (SNE) PlayStation Portable (expected to sell about 16 million units).

Might Apple have the best-selling handheld game machine in the world by the end of this year? If it does, it could be partly thanks to fresh thinking about how to exploit Apple's large installed base of users and its low-priced App Store. Finally, Apple's got its game on.

Hesseldahl is a reporter for BusinessWeek.com.


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