You don't think it more likely that they woud use their warchest and careful consolidation to try to adapt to new market conditions?

I can agree with that.

I think there's a definite risk there.

But I also think Nintendo is nimble enough to survive. The 3DS looks to me like a retreat upstream. Just look at all the big 3rd party core games in the lineup, and not a single new game idea to draw the expanded audience.

Maybe Nintendo is going back to the DS strategy of bringing out the next Nintendogs or Brain Training after the early-adopting core crowd are already on board, instead of driving the platform with new ideas from the start, like the Wii. Maybe they're just tapped for ideas right now. To me, it looks like Nintendo is moving to secure the upstream mobile gaming market, because it just can't compete with $1-5 indie games.

And I think Nintendo could survive rather well with a 3DS that sells like the PSP, serving the most game-obsessed customers, and biding its time until the right opportunity to counterattack.

Angry Birds may have been downloaded 50 million times, but considering it's a free download I don't think it's a particularly good example for the purpose of determining what barrier determines "mainstream."  Moreover, if that figure determines what is mainstream, then only Wii Sports and Super Mario Bros. have ever been mainstream games.  In light of the cultural penetration and awareness of many other titles, I can't agree with that.

I'm pretty sure Rovio's touted 50 million downloads include a whole lot of free iOS demos that they don't see revenue for. I just don't believe that they've been on Android long enough to get tens of millions of downloads, and the Ovi Store doesn't see that much action.

I'm sure they're well over 20 million revenue-generating downloads, maybe even over 30 million, and they're still going like gangbusters. But they're also spreading to PCs and consoles, so the numbers are about to stop being smartphone exclusive.

@noname

12 million iOS copies of Angry Birds are paid, plus an unknown number of Ovi downloads.

I believe DSiWare was created precisely for this purpose.  Whether that strategy will utlimately succeed is a different question, although I'm inclined to think that a $2 minimum and highly restricted release schedule (only 2-4 games each Monday) will weigh heavily against it.

Really?  Sweet...

One, 1, juan, uno. One .99 game selling 50M is gonna topple Nintendo selling 100M over only 5 games at lets say an average price of $25? I fail to see your logic. Also, weed should only give you a 1-2 hr buzz tops (really its less).

Source: http://en.wikipedia.org/wiki/List_of_best-selling_video_games#Nintendo_DS

Historically, those two things hardly guarantee success.  Microsoft's succeeded by leveraging these brilliantly, but indomnitable behemoths like Kodak, General Motors, and Blockbusters have shown that not everyone can do so successfully.  Nintendo has a leg up on these companies in that they at least seem to be aware of the danger, but obviously it's still an open question whether they'll succeed.  I'm personally not sure the 3DS will meet the challenge with complete success, but...

@OP - Sure, but your theory can apply to any of the comapnies' existence in the videogame market entirely. Other divisions of Sony were more profitable than its videogame sector, does that imply Sony will leave the videogame market? I don't think so.