Nintendo's in an awfully tough spot here. Their success in expanding the market to non-gamers (the "blue ocean strategy") puts them in exactly the wrong place for 2011 where it appears likely that most dedicated gaming systems are going to be owned by the hardcore going forward. Many of their newly-won customers from the last few years now have all the games they could want on systems they already own and those games have average price tags of maybe 20% of what they are on traditional platforms. And they're better connected for social, too.

So Nintendo doesn't have room to make particularly enticing hardware - it'd have to be super-cheap to tear people away from platforms they already own for other reasons but it'd probably have to be super-expensive to be different enough to be exciting.

And, even worse for them, the bottom has completely dropped out of software pricing. It's tough to pay $40 for a 3DS game that I'm likely to play less than something for $2.99 on the App Store. I'd buy Mario and Zelda for it, but that's probably it.

With the very Nintendo "make something cheap but that's so different and so cool that everybody with an iPad would still want it" option off the table, what can they do? Can they survive just selling <$10 games on somebody else's hardware? Maybe a partnership? An Android partnership doesn't seem likely to deliver Nintendo quality in the short term at least and Apple is quite unlikely to partner with them. No other mobile platform seems worth their time.

I do wonder if there's a team working on Zelda for iOS... And another team preparing a massive reorganization. Seems like a terrible option but I don't see what else is going to be available to them. Hope they can find a good way out of it because they're one of the most innovative companies in the world.