Nintendo Releases its New Handheld

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Nintendo, the world’s biggest maker of portable game consoles, began selling its newest hand-held player yesterday, accompanied by a $40 million advertising push aimed at taking customers away from Sony.


The ads for Kyoto-based Nintendo’s biggest-ever product introduction emphasize the dual screens on its new Nintendo DS player. Other ads promote the DS’s touch screen and voice recognition capabilities, which can be used to control game characters.


The DS is at the center of videogame maker Nintendo’s push to defend its dominance of the $4 billion handheld game market as Tokyo-based Sony prepares to enter portable gaming for the first time. The DS reaches stores in America in time for Christmas. Sony’s Portable PlayStation, or PSP, goes on sale December 12 in Japan and next year in America.


“Sony is going to take some business in the hand-held arena, which has been virtually monopolized by Nintendo up until this point,” said an analyst at Credit Suisse First Boston in Tokyo, Jay Defibaugh. “Nintendo’s marketing in the U.S. is clearly skewed-up demographically, which is what Sony is after.”


With commercials built around the tagline “Touching is Good” and the DS’s double screens, Nintendo’s executives are putting a different face on a company known better for Donkey Kong and Mario the Plumber than for sex appeal.


The DS commercials, which run between episodes of “The Simpsons” on News Corp.’s Fox network and Viacom Inc.’s “South Park,” are “more provocative than the work you’ve maybe seen to date,” said the executive vice president of Nintendo’s Redmond, Wash.-based American unit, Reginald Fils-Aime. The DS is “less of a toy and more of a high-end consumer electronic device.”


As part of Nintendo’s push to market the silver-colored DS among older gamers – as well as the under-16 crowd that comprises half the company’s customer base – Nintendo has teamed up with retailers such as Electronics Boutique Holdings Corp., Gamespot.com, Wal-Mart Stores Inc., and Toys R Us Inc. to organize demonstrations showing off the DS’s features, Mr. Fils-Aime said.


Black, silver, and white packaging, and a game lineup ranging from Electronic Arts Inc.’s “Madden NFL” to “Super Mario Brothers,” means the device may appeal to older gamers as well as a younger audience, Mr. Fils-Aime said.


Nintendo will sell the DS for $149.99 in America and 15,000 yen in Japan, the most it has ever charged for a handheld. Sony’s PSP will be priced at 19,800 yen ($190) in Japan. Adding peripherals such as a memory card, AC adaptor, and battery pack will boost the PSP’s price to 24,000 yen in Japan. Sony hasn’t set an American retail price.


Advance demand for the DS is outstripping supply by about 2-to-1 in both Japan and America Nintendo says. The company, which plans to ship 2 million units to both markets by the end of the year, will extend DS production to a third site in China to meet demand.


“Nintendo knows that their target market of young people is demand conscious, so if they can cause over-demand, it adds lasting value,” said Peter Boardman, who manages about $250 million in non-American equities, including Nintendo shares, at NWQ Investment Management Co. in Los Angeles. “The device gets established as a thing to own.”


The DS is the latest in a long line of hand-held game players from Nintendo. The company sold its first Game Boy on April 21, 1989, in Japan. Nintendo’s worldwide sales of Game Boy, including updated versions of the player called the Game Boy Advance and the Game Boy Advance SP, totaled 172.4 million as of June, the company has said. Handheld hardware and software accounted for 62% of Nintendo’s revenue in the business year ended March 31.


The DS’s release in America is timed for the holiday season, when the company gets 40% of its sales, said a spokeswoman for Nintendo of America, Redmond-based Beth Llewelyn,.


Not to be outdone, Sony has erected PSP displays in train stations throughout Tokyo, mirroring the company’s campaign for its PSX combination game console and DVD recorder last year. Each PSP is displayed behind a clear plastic case. Uniformed guards prevent passers-by from touching the devices.


Sony executives say the PSP will have the same graphics capabilities as its best-selling PlayStation 2 console. PSP will also have a wireless connection and the ability to play movies and music from an optical disc designed specially by Sony for the PSP player.


Sony said last month it expects to sell 500,000 PSPs in Japan by the end of the year. The company won’t say how much it will spend to advertise the console. Nintendo officials say they’re unfazed by the challenge Sony presents.


“Sony has an uphill climb on their hands,” said Nintendo’s Ms. Llewelyn. “We own this business.”


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