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Its not about profits sometimes. When your competitors catch up, its not a good sign, and i think Nintendo are afraid of further declines especially since software was a major issue. They had to drop the price to find new consumers, and it was logical.

But i also believe that they do need big software, and thats why nintendo are working on big titles now like Zelda, metroid, SMG2, NSMB, pikmin, dynamic slash, and a vitality sensor game. They know they have to act and thats what they're doing