Didn't Nintendo experience over like 20 years ago a smaller scale version of what the iPhone is going through?

"If fun and interesting software to take advantage of the technology could be created that easily, a number of other titles which are more fun than Wii Sports must have been already launched for Wii. Why in real life are not so many?"

Good question which applies equally to Nintendo and it's rivals: why are there so few Wii games which take genuine advantage of the technology (as opposed to making players waggle the wiimote instead of pressing a button) to provide a fun, immersive experience?

After all, Nintendo is expecting to bank 2.5 billion dollars in profit this year alone: what are they actually doing with this money? There's very little evidence of it being ploughed into research or new franchises.

@juice, so you expect companies with profit to invest it all in research? Thanks to the savings racked in the past they were able to stay in game in the home console market.

@Roberto: No, but I expect them to do invest at least *some* of that money into funding development for the future. What Nintendo appear to have done is left their cash cows to milk themselves[*].

Admittedly, they've done more than well enough out of this, but the results from this quarter imply that the milk may be running dry on the hardware front and Nintendo have done very little to bolster things on the software front.

[*] Feel free to point out stuff like WiiFit, MotionPlus and the DSi/DS LL. They're all interesting in their own way and have sold well, but they're extrapolations/add-ons for existing hardware, not new technology. The iPhone is a major threat to the DS market: apart from the range and low price of games on the App Store, there's the fact that mobile phone technology is marching at a pace far quicker than Nintendo could ever hope to match - for instance, the iPhone 3GS has 256mb of ram, a 600mhz processor (downclocked from 833mhz) and a DX10 capable GPU. Meanwhile, the iPod Touch is price equivalent with the DSi, comes with a minimum of 8GB storage and does a much better job of being a media player...

The IPhone is not a treat to the DS, only because no one is going to pay $2000 (ATT plan) for a console only to play $1-$10 games. The IPhone is an interesting phone, that can carry some games, but it is not a gaming device (at least, not at that price). Also, the majority of games available in the IPhone are pick up and play games, most noticeably puzzles, and not the high depth games available in the DS. Production costs are very different between these platforms. Indies can do very well there, but a game with a production value of a few millions? I don't think so.

@juice, mobile phones have an advantage: telecoms subsidize prices. Console hardware companies do it themselves. Sony and Microsoft can do it because they have multiple areas within the company that can support each other.

I don't think Apple is threatening Nintendo, simply because Nintendo never focused on digital downloading. Gaming in iPhone is only a quarter of its market, the other represents phone calling, messaging, browsing and other services.

As long as Nintendo and other DS developers continue to bring good exclusive games to the DS, iPhone is not a threat at all.

I have to agree that the iPhone is not the threat. It's the iPod Touch that is the real threat to Nintendo's handheld devices.

No ties to AT&T.; Excellent Email/Browser. Excellent Hardware. Excellent APIs.

Cell phones have become a necessity now, so having one that happens to play games is no big deal. I don't see the iPhone as a big threat to Nintendo being that the games the iPnone has will never be as complex as the games the DS has. Are you really going to play RPG on the iPhone? Probably no time soon. So I would say that this whole comparison of the iPhone to DS is just journalism trying to make a rival between two markets that do two distinctively different things.

Oh @ Fabio
I don't pay $2000 a year for an ATT plan. it at least 500 dollars cheaper than that ;P.

@ Anwar: yes, but you are tied to a 2-year agreement, unless they changed that. So, in fact, you will pay $3000 for it.

@ Christopher: agreed, the iPod could do that. They just have to add some buttons to it (a d-pad and 4 buttons would do it). No physical buttons means less feedback to your actions, so I believe they are still fundamental. Some games may do well without them, but other still require it.

The iPhone provides a similar threat to the DS that Flash games give to PC games.

It's definitely a threat in some very serious ways, and a convergence is likely in the next 10 years....

...but in the short term these are separate markets with a fairly small area of cross over (I'd expect that the number of PSP owners who are likely to have an iPod Touch/iPhone is higher than the number of DS owners based on traditional age demographics of the systems). It's unlikely anyone is replacing Pokemon and a DS with Madden and an iPhone, but Madden on the PSP or Brain Age on the DS are more likely to have some cross-over.

"Are you really going to play RPG on the iPhone? "

Questions like these are becoming commonplace and the answer is a resounding yes. People are playing the heck out their iPods and iPhones. If you're asking these questions it's simply because you're not in the loop.

Although it was hardly difficult at any era of the company's development to 'stay' in the business. Even as poorly as the Gamecube and N64 turned out - they've made money on those generations of consoles. Not to mention that they had the total domination of the handhelds market all that time.

@Roberto/Fabio: I'll agree that the iPhone is not price competitive with the DS - though in the UK, you can buy the 8GB PAYG version (i.e. no contract) for 340 GBP ($550), or roughly 2.3 times the price of the DSi (150GBP).

However, the main point I was making about the iPhone was the difference in technology. I.e.
2007: Original: 412mhz CPU, 4-16gb storage, basic 3D accelerator, 128mb RAM
2009: 3GS: 600mhz CPU, 8-32gb storate, DX10 GPU, 256mb RAM

Compare this to the DS:
2004: DS: 67 mhz CPU, 4mb ram, no storage
2008: DSi: 133mhz CPU, 16mb ram, 256mb storage

The original Gameboy is proof positive that technology is not always a key factor, and both the DSi and iPhone 3GS are hampered to a degree by the need for backwards compatibility, but still: that's a huge gulf and it's only likely to get bigger.

Moving away from that, the 8GB iPod Touch is the same price as the DSi (150GBP) and offers the same feature set (give or take the ability to make phone calls) as the iPhone. There's also a lot of in-depth games available above and beyond the "casual flash" stuff most people tend to associate with the iPhone.

Perhaps ironically, the main reason why the DS is likely to remain competitive is because the App Store has such a high churn and volume of titles: by comparison, the "walled garden" game approval mechanism on the DS and Nintendo's strong brand recognition helps to provide more consistent (not necessarily higher!) quality and experience. On the other hand, with many games on the App Store being free or less than $3, there's a huge economic incentive to switch to an iDevice.

Admittedly, there's also the control factor: Steve Jobs is unlikely to approve adding a joypad to the iPhone anytime soon!