Nintendo Launching DSi Because DS 'Momentum Won't Last,' says Iwata

The video game industry has been abuzz since Nintendo unveiled its new DSi handheld in Tokyo (and then in San Francisco), but reactions to the new device so far seem to be lukewarm. In fact, after the announcement Nintendo's stock fell 3.7 percent to close at 39,500 yen on the Tokyo Stock Exchange.

"Nintendo's announcement on the DS didn't exceed investors' expectations," Yoku Ihara, head of equity research at Retela Crea Securities Co commented, according to Bloomberg. "The stock market was so bearish that the news didn't help the shares gain." Nintendo stock overall has lost 41 percent in 2008 after it doubled in each of the last two years.

According to Nintendo President Satoru Iwata, the company is releasing the DSi because it feels that the traditional DS could start to lose momentum. "DS sales have been very strong, but I don't think the momentum will last much longer because the player has been available for almost four years," Iwata commented to Bloomberg. "We wanted each family to have one DS, and now we want every member of a family to have one."

Analysts aren't so sure that the DSi will stimulate sales, however. UBS analyst Ben Schachter noted that the DSi specifications just aren't high enough to grow the user base.

Speaking to the Nikkei, Iwata added that Nintendo is attempting to transform the DS into more than a gaming device: "Because users can now download and save software, they can personalize the DS. By downloading subway maps and other things, for instance, the DSi can be useful for applications other than playing games. We wanted to create an offering that would fit naturally into people's everyday lives."

Importantly, Iwata was even more vague about the DSi's launch date in the West. While Nintendo of America said it wouldn't release here until "well into 2009," Iwata couldn't promise that, saying only that it will "probably" launch in North America and Europe sometime in 2009.