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Squilliam said:

It wasn't an analogy. I was drawing a parallel between the camera market and the game market. Nintendo is on the lower side of the market, the point and shoot equivalent. Because their games tend to be simpler and because they draw from the wider market, their portion of the market would be the first to be effected by a rise of smart phones for games. If smart phones negatively effect GPS units when they implement similar features, if smart phones negatively effect cameras when they implement decent cameras then smart phones would effect handheld games devices as well when some good software starts to come out to take advantage of it. The whole smart phone market is growing at a rapid rate and the capabilities on average to play games is increasing again at a rapid rate so as a whole their numbers and effectiveness as games machines are increasing precipitously every year.

As far as deals with online makers go, Nintendo doesn't like to lose control. I don't think theres an online network out there which will simply let you 'buy in' without the device maker losing that control. If they did that then some other service provider would control their networking. So whilst they could spend the money they are a relatively small company so at minimum they would be forced to increase their headcount substantially. In any case regardless of all that they would also have to have the drive to create a good online network, it just doesn't seem to fit the culture of Japan at this point to really care about such things. So when they do create their online network if they do, it may be too late to make headway.  

You can keep listing all of the swiss army knife features of smartphones over and over but playing Nintendo’s games still won’t be one of them.  As I said before, the features you continue to point to are functions provided by tools that can be used on smartphones at a lesser quality. If say, you could have the benefit of Nintendo's software on smartphones at a slighlty lesser quality, then your argument would be more plausible, but that’s not the case here.  You're forgetting that we’re talking about Nintendo here, not some random company that happened to strike it lucky one time with a gaming handheld.

You’ve now retreated to saying that smartphone games will only effect Nintendo’s handhelds (something I’ve never disagreed with), as opposed to what your thread title exclaims:  Nintendo will exit the handheld business altogether, which is the thing that I just don’t buy.  Have smartphones effected home PCs or Laptop sales?  Perhaps.  Have they rendered them obsolete?  Certainly not; people have uses for all three, just as there will always be people who have a use for a dedicated game handheld.  You seem to think that people must ultimately choose between Apple's business model or Nintendo's, when again, there's room for both.

Which brings me to your second argument.  Yes, Nintendo certainly does love their control, as evidenced by their past fallout with Sony.  But if it came to an adapt or die situation, why would Nintendo be incapable of taking whatever means necessary to (at the very least) sustain their business?  They certainly have the financial backing to do so, and remember, gaming is their one and only business.  If it really did come right down to it, why would they just throw in the towel and choose not to evolve with the times?  They did it with their home console storage media and they'll do it again.