[roc]

I think they were more blind-sided by the rapid consumer adoption of gaming on mobile devices that were not dedicated-gaming devices.

The Wii showed no sign of slowing due a lack of HD. It seemed to slow simply because it was an unexpected and wholly unprecedented mainstream success whose sales were simply not sustainable. It was always going to taper off and it's possible some of Nintendo's loss is attributable to not curtailing manufacturing quickly enough and having too much inventory.

But the loss story seems to be primarily a mobile one. Nintendo took a PS3-like approach with the 3DS, approaching a newly competitive landscape by trying to bury the competition with advanced technology. And, much like Sony, advanced technology alone wasn't enough to pull in consumers at higher prices. Things are definitely looking up as they've gotten more quality software onto the platform and prices have dropped.

But were I a stockholder I would be nervous about their plan to cut the 3DS price below-cost. Customers are ever-more price conscious with hand-held software and expecting revenue from $30+ mobile titles to make up for a loss on hardware is perhaps not a wise strategy. One would hope their manufacturing advances and thus cost cuts are not far behind the promised price cuts.

Similarly, the Wii U finds itself in a very different competitive landscape. It may well make Nintendo a solid profit even if it never achieves the breakout success of the Wii. But it may not start strong out of the gate, if the launch software can't make a compelling case for the technology. It's first-year profits may not be enough to offset another bad year from the 3DS.