For decades, Nintendo's business model has been simple: Make games that are fun to play, and game consoles that are fun to play them on. Where Sony and Microsoft lost money on each XBox and PlayStation console sold, each Nintendo Gamecube and Wii console equaled pure profit, and was the only way to play Nintendo-exclusive games like Mario and Zelda.
Yet the deep price cuts for Nintendo's 3DS game console suggest that the company may be rethinking this approach, if only out of desperation. What, if anything, it plans to use to replace that approach is not clear yet. But we can look to the choices made by other game companies, to get some ideas of what Nintendo might do ...
The Sega Route: Ditch consoles completely
After its Dreamcast game console flopped, Sega turned into another third-party developer, making Sonic the Hedgehog titles for its former arch-rival Nintendo's consoles. This is the path that a lot of people seem to want Nintendo to take; they're hoping Nintendo will switch to write games for the iPhone and iPad, which have somehow become the game consoles of choice for most people. Nintendo, however, has rebuffed them.
The key difference to keep in mind is that Sega had its arcade business to fall back on. Nintendo has basically nothing, outside of its consoles and exclusive games. And as each new Nintendo console, from the 3DS to the Wii U, becomes increasingly ... shall we say, unique, the extent to which Nintendo relies on its hardware becomes apparent. But it's also becoming more gimmicky, with endless attachments and touch-screen controllers. So this may end up being the path that Nintendo takes, whether it likes it or not.
The Sony Route: Desperate measures
Not only is Sony copying Nintendo with its exotic, touch-screen successor to the PSP, called the Vita, it's also one-upping the people who say that Nintendo should write games for smartphones. That's because it's made its own smartphone, the Sony Ericsson Xperia Play.
The Xperia Play is the first "PlayStation Certified" smartphone, with a PSP Go style slide-out controller, complete with shoulder buttons and analog thumb pads. And it's also a capable smartphone in its own right, able to stand up to competitors like the Evo and Droid. That's because it uses Google's open-source Android operating system, which is available for any manufacturer to use.
The Upshot
Making its own smartphone is certainly one way that Nintendo could stay in the "game console" business, even as gaming begins to move to smartphones. A company as big as Nintendo can't turn on a dime, though, so even if it decided right now that it needs to do this it probably won't be able to. Not before hemorrhaging employees and stock value, and shrinking into a shadow of its former self.
If there are any Nintendo game consoles ten or twenty years from now, though, this is probably what they'll look like ... and probably still the only way you'll be able to play Mario and Zelda, if Nintendo doesn't go the iPhone route.
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