October 30, 2009 4:36 pm

Nintendo ponders Kindle tactics for consoles

Nintendo is looking at the business model of Amazon’s Kindle as it considers the future for its portable consoles, the company’s president said on Friday.

“I’m interested because it’s a new business model in which the user doesn’t bear the communications cost,” Satoru Iwata said.

Amazon’s portable electronic reader connects to a 3G mobile phone network to download new books, but the service is included in the device’s upfront cost.

Mr Iwata’s comments highlight a tactic Nintendo could use to counter the strategic threat to its DS handheld console from the iPhone and other smartphones that download games from “App Stores”.

At present, the DS is able to download contents via a wi-fi connection, but most games are sold on cartridges that are expensive to produce and distribute.

“Only people who can pay thousands of yen a month [in mobile phone subscriptions] can be iPhone customers. That doesn’t fit Nintendo customers because we make amusement products,” Mr Iwata said.

The Kindle’s one-off cost would better suit Nintendo’s customer base, he said. “In reality, if we did this it would increase the cost of the hardware, and customers would complain about Nintendo putting prices up, but it is one option for the future.”

Nintendo’s DS has sold more than 113m units worldwide since it launched in 2004 with what was then a revolutionary touch screen control system. However, with one DS now sold for every 4.5 people in Japan, analysts say the product is nearing the end of its lifecycle.

Sony recently launched the PSP Go, a rival handheld console that has no slot for physical media and relies on wi-fi for downloads.

Early sales of the device have been sluggish amid signs that retailers are reluctant to push the console as they would not gain additional income from software sales.

Mr Iwata was cautious about how quickly the industry in general will move to digital downloads. He said: “I think it will take quite a long time.”

Speaking at a briefing for analysts after Nintendo slashed its profit forecasts because of a lack of hit software to sell its Wii console, Mr Iwata drew attention to the unpredictable nature of the games business.

“Who thought Pokemon would sell around the world, or that Brain Training would take off, or that Wii Fit would become an explosive hit?” he said.

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