Nintendo Co announced a new Switch console for release Oct 8, a long-awaited US$350 gadget likely to stimulate a wave of new software and holiday season sales.

The new device marks the first major hardware upgrade to the console originally released in 2017 for US$299 . Its key upgrades are a larger 7in OLED screen and a doubling of onboard storage to 64GB. It’ll come with improved audio and a new adjustable stand and dock, according to a statement from the company Tuesday.

A widely anticipated upgrade to the console’s graphics - to 4K display capabilities matching rival offerings from Microsoft Corp and Sony Group Corp - did not materialise in this announcement, disappointing some fans and investors. Nintendo shares recovered early losses to end largely unchanged on Wednesday after Jefferies downgraded its rating to hold.

“This new Switch looks more like an interim model than a real upgrade to me,” said Tokyo-based analyst Serkan Toto. “This might just be a dummy upgrade until Breath Of The Wild 2 is ready and the component shortage is over next year.”

The Kyoto-based games maker broke with convention when it introduced the original Switch, a hybrid console capable of connecting to a TV at home as well as being used as an independent mobile device. Sales of the machine have been consistently strong. The Covid-19 pandemic combined with runaway hit Animal Crossing: New Horizons supercharged demand throughout 2020.

Nintendo introduced a mobile-only Switch Lite in late 2019 as a more affordable US$199 option. Cumulatively, the Switch family has sold 85 million units worldwide as of March 31.

“Nintendo’s updated Switch console with an OLED display won’t catalyse as strong sales as the rumored Switch Pro device, in our view, given it maintains the same graphical fidelity as the original Switch. A Switch Pro with 4K graphics may have to wait until fiscal 2023 alongside the expected release of the sequel to Zelda Breath Of The Wild and other key games,” said Bloomberg Intelligence analysts Matthew Kanterman and Nathan Naidu.

Nintendo president Shuntaro Furukawa said in May that the Switch’s sales momentum is unprecedented in the company’s 131-year history. He signalled confidence that the pace could be maintained or even increased as the platform is only at the midpoint of its planned lifecycle.

Nintendo’s share price remains near its all-time high as the company continues to see greater demand for its devices than it’s able to immediately satisfy. Anticipation is also high around the slate of new games set to accompany the new model’s release. Nintendo had been exploring a 4K-capable version of the Switch, Bloomberg reported in March.

The first challenge for Nintendo ahead of the new console’s debut will be to ensure it has adequate inventory. Global semiconductor shortages have frustrated production plans across various industries, affecting everything from cars to TVs and consoles to personal electronics like headphones. Sony’s PlayStation 5 has been extremely scarce since its launch in November, leading to game sales for the new platform also struggling, according to data from market trackers such as Japan’s Famitsu.

“A lesson we learned from the PlayStation 5’s launch is that making sure to have enough inventories is really the only step that any company can take to keep scalpers at bay and make gamers happy and willing to spend a lot on the platform,” Ace Research Institute analyst Hideki Yasuda said.

 - Bloomberg