Nintendo chief sets sights on software

Newly appointed president Satoru Iwata is worried that Nintendo's hardware is reaching its limits in graphics and sound so he's focusing his company's efforts on software.

In a meeting with analysts on Thursday, newly appointed Nintendo president Satoru Iwata revealed the company's new direction. Nintendo plans to expand its share of the video game market by focusing on making better games rather than on building increasingly powerful consoles, its new president said Thursday.

"We can't be optimistic about the game market," he said, referring to consoles at a meeting with analysts at a Tokyo hotel. "No matter what great product you come up with, people get bored. I feel like a chef cooking for a king who's full." Iwata also revealed Nintendo's intent to sell 50 million GameCube consoles by March 2005. Nintendo has already shipped 4 million GameCubes since the system's launch in September of 2001.

Iwata reiterated Nintendo's strategy of appealing to consumers with innovative games, rather than trying to build ambitious, all-encompassing entertainment platforms like Sony's PlayStation 2 and Microsoft's Xbox. "We're reaching the limits of how far we can appeal to consumers by boosting the machine's performance or providing more compelling graphics and sound," Iwata said during the meeting. "For the past few years we've been looking for new ways to surprise people, new ways for them to have fun."

Iwata also defended the company's policy of maintaining a stockpile of cash rather than investing it in new businesses. "We have 900 billion yen ($7.25 billion), but one of our rivals, Microsoft, has 5 trillion yen," he said. "This is a high-risk business. There may come a time when we would have to make intensive investments."

This meeting comes shortly after the company posted a profit of 106 billion yen ($849 million), up 10 percent from the previous year, on a 20 percent rise in sales. Nintendo has also met other console manufacturers Microsoft and Sony in a price-slashing war, dropping the price of its GameCube from $199 to $149. Iwata expressed concern, however, that the price-cutting fever in hardware may spread to software, where it could do severe damage to game makers' bottom lines.

"We have a sense of crisis, that price cuts in software could destroy the game industry," he said. "The effort to produce machines with better technology has reached its limit," Iwata said. "If things continue, they may lead to the decline of the entire game industry."

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