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Nintendo Doesn't Care What We Think, Let's Get Over It


Nintendo has good reason not to rush into the iPhone's arms.

There's no shortage of suggested solutions to Nintendo's (OTCMKTS:NTDOY) woes.

The legendary video game giant, which seven years ago was the talk of the town courtesy of its blockbuster Wii console and DS handheld, has fallen on hard times as those products' successors have flopped.

The Wii U is too expensive, too complicated, and carries none of the sheer novelty power the original Wii had.

And the 3DS was cut off at the knees by the emergence of smartphones like the Apple (NASDAQ:AAPL) iPhone as "good enough" mobile gaming solutions for the mass market.

Last week, Nintendo guided down by a significant margin. It said it expected to sell 2.8 million Wii U units for the full year, down from its original forecast of 9 million. And its 3DS forecast went to 13.5 million units from 18 million.

At its press briefing today, Nintendo CEO Satoru Iwata made a number of announcements, including a move into heath care, and plans for an on-demand gaming service, but he refused to consider the one thing most Nintendo critics are demanding: a move into smartphones.

Iawata said Nintendo will use smart devices to "make connections with customers," but not as actual game platforms for the company's staggeringly valuable game properties like Mario, Zelda, and Metroid.

Now everyone's wondering why Nintendo is being so stubborn. There's a more or less universal assumption (which I will question in my next article) that Nintendo would print money if its games popped up on Apple and Google's (NASDAQ:GOOG) app stores.

Nintendo's two most successful hardware platforms, the Wii and DS, sold over 250 million units combined over their lifetimes.

In 2013 alone, over 1.2 billion smartphones and tablets were sold, according to market research firm IDC. That's a huge addressable market to attack.

Additionally, there's a strong argument that Nintendo should make games for the Microsoft (NASDAQ:MSFT) Xbox One and Sony (NYSE:SNE) PlayStation 4, which are rapidly outselling the Wii U.

But if you look at the cultural and historical contexts, you'll see that it's just not so simple.

You have to remember that Nintendo has been through tough times before, and it has survived while a number of hardware competitors like Sega, Atari, Neo Geo, NEC, and 3DO couldn't.

After kicking off the modern console-gaming era with the Nintendo NES, it saw its next three consoles each decline in sales, hitting a low with 2000's GameCube, which was crushed by the Sony PlayStation 2.

In fact, the GameCube sold just one-third the units of the NES, and Nintendo was thought of as a mere relic.

Then the Wii and DS hit it big, and Nintendo was back on top in the blink of an eye.

So you've got to think that, from the inside, Nintendo sees itself as a survivor -- not a victim ready to roll over just because the media and Wall Street are making demands.

Incidentally, that resistant attitude has carried through to Nintendo's fans. Seriously, have you ever tangled with these people? By comparison, Apple fanboys are about as tough as a basket of golden retriever puppies.

But in all seriousness, this is a company that does not give up easily.

Additionally, the fact that Nintendo is a Japanese company -- and an insular, stubborn one at that -- is relevant. That means legal and cultural resistance to layoffs, which would impede restructuring efforts, particularly if Nintendo was to abandon hardware.

Luckily for Nintendo, it's backstopped with a wall of cash -- over $8 billion of it. If we make the assumption that Nintendo can turn on a money spigot by turning to third-party hardware platforms, that mountain of money means it doesn't have to do so any time soon. It can afford to wait until the very end.

So Nintendo's going to do what it wants, and it's time to stop issuing conventional wisdom disguised as advice, because the company just doesn't care.

And that's a good thing. It makes the video game world a more interesting place.

Stay tuned for my next article, in which I'll question the idea that Nintendo can make easy money by producing games for tablets and smartphones.

Follow me on Twitter: @MichaelComeau

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