In Super Mario 3DLand, Nintendo would make its iconic Italian plumber battle turtle-like Koopa Troopas on its 3-D player. The company should instead develop titles for Apple Inc’s iPhone, investors say.

The rift highlights the dilemma President Satoru Iwata faces as consumers shun Nintendo devices to play games on iPhones, iPads and Facebook Inc’s website. The flop of the 3DS debut prompted the company to cut prices 40 per cent in Japan and 32 per cent in the US, the first time the games developer has resorted to such a move within six months of a product’s debut.

Iwata, who’s said Nintendo would only make titles for its own products as long as he’s in charge, should scrap that strategy to avoid further alienating investors who’ve driven the stock to six-year lows, fund manager Masamitsu Ohki said. One option may be acquisitions as the past successes of the Wii and DS helped Nintendo, the world’s largest video-game maker, build a 1.05-trillion yen ($13.7-billion) war chest in cash, equivalents and short-term investments.

“Smartphones are the new battlefield for the gaming industry,” said Ohki, a fund manager at Tokyo-based Stats Investment Management Co. “Nintendo should try to either buy its way into this platform or develop something totally new.”

He declined to identify his holdings or to name any companies that Kyoto, Japan-based Nintendo should consider as acquisition targets. Yasuhiro Minagawa, a spokesman at Nintendo, declined to comment beyond statements made previously by Iwata.

POKEMON TEASE
Ohki isn’t alone in saying Iwata should reconsider his strategy. On July 6, Nintendo shares jumped the most in almost four months after Pokemon Co, a former unit, said it’s developing a game for the iPhone and handsets running on Mountain View, California-based Google Inc’s Android software. JPMorgan Chase & Co sent a note to clients, saying the move indicated Nintendo may begin making titles for products outside its proprietary hardware.

Hours later, Nintendo denied any change in strategy, and the shares surrendered gains. “They just don’t get it,” MF Global FXA Securities Ltd said in a sales note that day, referring to Nintendo. “Sell the stock, because a management once feted for creative out-of-box thinking have just shown how behind the times they are.”

‘ANGRY BIRDS’ CHALLENGE
Lower-than-expected demand for the 3DS, which Iwata blamed on the lack of hit titles, prompted Nintendo on July 28 to slash its profit forecast 82 percent, driving down the shares by as much as 21 per cent the following day. They fell 0.2 per cent to 11,430 yen, at the 3:10 pm close in Osaka trading, the lowest level since August 2005. By comparison, profits at Cupertino, California-based Apple are climbing to records, helped by downloads of games such as Rovio Mobile Oy’s Angry Birds on the more than 200 million iPhones, iPads and iPods sold to date. Research firm Gartner Inc. said in January it expects global sales of mobile applications to almost triple to $15.1 billion this year.

Revenue at San Francisco-based Zynga Inc., the biggest developer of Facebook games including FarmVille and CityVille, surged fivefold to $597.5 million last year.

Some traditional games companies have taken notice.

Source - [ business-standard.com ]