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Why Nintendo isn't making a phone

Mark Milian
Nintendo of America's Reggie Fils-Aime, above, cites lack of a competitive advantage as a reason his firm isn't building a phone.
Nintendo of America's Reggie Fils-Aime, above, cites lack of a competitive advantage as a reason his firm isn't building a phone.
  • Unlike gaming rivals Sony and Microsoft, Nintendo says it has no plans to build a cell phone
  • Company faces increased competition in mobile gaming from smartphones

San Francisco (CNN) -- Playing Super Mario on a Nintendo phone will remain a pipe dream.

Although Microsoft and Sony -- Nintendo's rivals among the "Big Three" gaming companies -- have branched into mobile phone development, Nintendo isn't planning to build a phone or license its games for third-party software platforms, executives for the Japanese company said in interviews.

Instead, the video-game giant is continuing to focus on machines dedicated to entertainment.

"We have no desire to get into telephony," Nintendo of America President Reggie Fils-Aime said. "We believe that we will earn our way into someone's pocket without having to offer that (phone capability) as an additional factor."

Nintendo isn't completely discounting the idea, but the high costs involved in cellular carrier partnerships are a roadblock, said Hideki Konno, a top Nintendo producer.

"It's not that I'm uninterested," Konno said through a translator. "However, I look at the business model, and I see so many additional costs that come into play." Splitting revenue with cell operators would affect the retail price of games, he said.

"Would we increase the price of the software itself?" Konno asked. "The distribution couldn't be free."

On March 25, Nintendo released the 3DS, the first mainstream gadget available that can show 3-D graphics without the need for special glasses. Games cost about $40, compared with the free and inexpensive applications available for phones. In addition to games, the 3DS also is designed to be able to download movies or stream them via Netflix.

Some tech bloggers have wondered aloud whether Nintendo should have put cellular connectivity in the 3DS, and some analysts project that smartphones could cut into the market for hardware dedicated to gaming.

But in the U.S., the 3DS sold more units on its launch day than on any other DS or GameBoy system's first day, Nintendo said in a statement. Nintendo didn't release sales figures, but the NPD Group will release a report in two weeks.

LG Electronics and HTC are both working on smartphones with displays capable of glasses-free 3-D similar to Nintendo's. The technology has gotten off to a strong start, especially with children. Yongseok Jang, LG vice president of strategy, recently joked that his kids are "begging" him for 3DS systems. "But I said no way," he said.

While Apple has had significant success with the iPhone, some of its mobile-platform adoption has been driven by the iPod Touch, a phone-less entertainment device. And Samsung Electronics is releasing a similar handheld media player, called the Galaxy Player, in the U.S. in the next few months.

Nintendo recently has begun heavily criticizing the sprouting smartphone-games industry. Executives said the app-store model degrades the quality of games and isn't sustainable.

"We don't want to be in the phone business," Fils-Aime said. "We don't see that as an opportunity. Phones are utilities. Phones are not by definition entertainment devices."

Even so, Nintendo has been thinking about phones for at least a decade. It filed a patent for a game-playing cell phone in 2001.

"It makes sense to enter a market when you feel you've got some sort of competitive advantage," Fils-Aime said. "From Nintendo's perspective, we don't see that we have a competitive advantage in telephony."

Sony Computer Entertainment, which makes the PlayStation, is working on a new portable system dedicated to gaming. It is also licensing older games in its catalog to outside vendors.

The first fruit of this mobile-gaming-software platform, called PlayStation Suite, will be Sony Ericsson's Xperia Play phone for Verizon Wireless. While the legacy PlayStation games come from Sony Computer, the phone maker is responsible for negotiating deals with other game developers to support its hardware, said Peter Farmer, Sony Ericsson's head of marketing for North America.

Sony's new nonphone PlayStation gadget, which is scheduled to debut this year, will be able to connect to cell data networks for online play and accessing downloads.

Fils-Aime from Nintendo did not discount the idea that a Nintendo system might adopt this strategy at some point and highlighted the relationship his company has with AT&T. Owners of the 3DS will receive free access to AT&T's public Wi-Fi hot spots in the U.S., starting in May.


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