Ah, the elusive "demographics", target of marketers everywhere yet seeming to have no cohesive nature to speak of. I don't know if you've noticed, but Nintendo has done what many highly successful companies do: they've foregone the concept of "demographics" in the original sense, and focused instead on tiers of users. To wit, there are four tiers:

Tier-0: Existing customers, already part of the market and not going to leave
Tier-1: Soon-to-be non-customers, who are either recently departed from or soon to depart from the market
Tier-2: Refusing customers, who actively refuse the product.
Tier-3: Distant customers, who aren't aware of your product.

These tiers disregard the traditional "demographic" concept entirely, and fit actual human behaviour much more clearly. The original DS was targeted at Tier-0/Tier-1 customers (there's not much difference between these tiers), while the DS Lite is clearly aimed to bring in Tier-2 users (sleek design with longer battery life, brighter screens, and a slew of "non-game" titles to satiate the concerns of those who actively refused video games).

The DSi targets Tier-3 the only way one can: by expanding the product's target market by adding features which have nothing to do with the surface-level purpose of the device, but match perfectly with the overall purpose of the device. To wit: the purpose of the DS is to be useful and to entertain. The purpose of the DSi camera is to be useful and to entertain. The purpose of the DSi music player is to be useful and to entertain. The central values align, and as such, it can act as a form of "gateway" to video games for Tier-3 customers to move up to Tier-2 ("I only use it for photos and music, not games!") and eventually Tier-1 ("Okay, I'll give games a try...") and Tier-0 ("Yeah, I play games on it!").

Please point out where I said it won't sell? Where did I say it won't be popular? Funny, it looks like I didn't say that at all.

@ Gnizmo

The way I understand it:

The DS fat was Blue Ocean phase 1, it attracted Soon to be Customers (people getting bored with your product or about to leave) because offered something new and unique no other device had. The PSP on the other hand was more directed to the people still in love with gaming or multimedia.

The DS allowed gaming to people that wanted to play but found it difficult, however most of this people (girls and old people) could not like the design, the screen was not too bright to see, was heavy etc. The DS Lite then is the answer for all this complaints. The PSP Slim on the other hand, was still for most people interested in gaming or multimedia.

Gnizmo..I never said you said it wouldn't sell..but if it does sell..who will it sell to if not the distant customer?!

let me put it in words you might understand:

it will sell great..who do you think it will sell to?

A. existing customers
B. non-customers
C. distant customers

now..pick an answer..and explain why

I see what you are saying here and it does make sense. The catch is, the tier 3 customers being targetted are the ones that will also be interested in the PSP and iPhone for the exact same reasons. If someone hears you can play MP3s on the new DS why wouldn't they have heard that you can do it on the competition as well? They are expanding their audience, but it is expanding right into the market space the PSP and iPhone have. I really don't see how you can call adding features your competitors have anything but an attempt to move into their space.

 D. People who have been putting off purchasing a DS for a little while and/or those who were going to buy a PSP but decided to go for the DS because it offers all the multimedia functions and more games.

Now here's where it gets interesting. The DSi WOULD be competing with the PSP and iPhone... if the PSP and iPhone were targeting the same customers as the DSi. But they're not. Both of those products target the technology-savvy user. Neither one is user-friendly to technologically inept users, particularly for those features. And most importantly, neither one is actively advertised to the sort of user that the DSi will be reaching out to: the confused, technophobic users who just want an easy solution without all this mucking around with complex hardware.

Customer image is everything. If your customers see your product as too complicated, even if you feel it's the simplest product in history, it's too complicated and you need to change it to get those customers to like it. The iPhone and PSP both have that to contend with for many many users. The goal of the DSi is to reach out to those users they cannot.

@ Gnizmo

>_>

hehehehehehe ^_~ good luck with that answer...then there must be a heck of alot of people...after all those years..

 I would argue that the PSP and iPhone have still be going after that same group of people though. The DSi will almost certainly be more popular than the two but that really is beside the point I am trying to make. The point I am trying to make is that group that will see the DSi as the easier to use option is part of the market targetted by the PSP and iPhone currently. Doing what the competitor does but better does not strike me as a particularly blue ocean move. It strikes me as a way to directly steal market share from the competition rather than indirectly by expanding the market.

 @Deathcape
I still have no idea what you are trying to say. You seem to be saying that because Nintendo put the camera in there it is magically different. That no where but on a Nintendo product could you have software to manipulate music and photos. Seriously, step back and type out your arguement in full. I have no clue what you are driving at but it makes absolutely no sense to me currently.