Nintendo insists the iPhone isn't a competitor

As the iPhone gains momentum as a handheld gaming device, game hardware manufacturers are struggling for ways to position themselves against Apple without backhandedly boosting Apple's reputation. Nowhere is that more apparent than at Nintendo, the company behind the Wii console and Nintendo DS, a dual-screen device that has taken the portable gaming market by storm. 

Reggie Fils-Aime, head of Nintendo's North American unit, told the LA Times last week that Nintendo was "intrigued" by the iPhone as a gaming device, but dismissed the App Store model that Apple has built. "We want to give our customers high-quality, innovative and captivating entertainment," he was quoted as saying. "A storefront with 10,000 pieces of content doesn't do that."

Nintendo's president, Satoru Iwata, also played down the threat of smartphones, telling the Financial Times that mobile phone games had been around for years and Nintendo had still managed to stay on top.

Certainly, Nintendo's numbers look impressive. NPD reported that 563,000 DS units were sold in March, more than three times the level of sales for the competing Play Station Portable from Sony, and even more than sales of the PS3 and Xbox 360 consoles combined. 

But the iPhone and iPod Touch have been selling well, too, boosted by a marketing blitz that highlights the App Store and games. People are buying iPhones, and buying games to play on them. 

Nintendo's response seems to be to pretend the iPhone doesn't exist. When asked whether the company sees the iPhone platform as a competitor, Denise Kaigler, vice president of corporate affairs for Nintendo of America, sent the following response to the Standard:

"Nintendo is the interactive entertainment company that knows the hand-held gaming market best.  Nintendo DS and Nintendo DSi feature ease-of-use, an immense library of games and an affordable price that players of all types find attractive.  Nintendo DS and Nintendo DSi offer consumers fun and experiences that they simply can’t find on any other system.  If you’re looking for fun games and experiences, no one can compare to what Nintendo has to offer.  Software always sells hardware, and the key drivers in the history of the hand-held industry have always been Nintendo products.  None of those franchises are available to anyone else."

When asked about the differentiators between the iPhone and DS, Kaigler responded:

"For consumers looking for fun games and experiences, no one can compare to what Nintendo has to offer. Nintendo has the freshest, most disruptive gaming experiences possible. The combination of dual screens, traditional buttons and the stylus on the touch screen provide for a precise, in-depth gaming experience. Nintendo DS also has a library of more than 850 games in every possible genre. Examples include Brain Age, Mario and Zelda games, and even Personal Trainer: Cooking software. No one can match the quality of our offerings."

Normally I don't include such huge, boilerplate marketing quotes, but I wanted to draw attention to the fact that Kaigler didn't even mention the iPhone by name.

However, analyst Wanda Meloni of M2 Research indicated that both Nintendo and Sony have plenty to worry about. Meloni projects that the iPhone/iPod Touch will have an installed base of 43 million units by the end of this year. That's almost as much as the Sony PSP, and about a third of Nintendo's reach with the DS and DSi.

Not only are there a lot of gamers and potential gamers with an iPhone and iPod Touch, but Apple buyers are also the biggest purchasers of mobile apps, Meloni says. The easy iTunes-based payment mechanism gives developers a huge incentive to develop for the iPhone/iPod Touch. Meloni adds that many developers are skilled veterans of the big game design houses who have been laid off in the past year, programmers who can crank out a new game and get it into Apple's App Store in a matter of weeks.

To be sure, Meloni warns that Apple's