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Nintendo Sales Fall by Half: Two Ways It Can Turn This Mess Around

Nintendo (NTYDO) can't catch a break. The once-top game company announced a 50 percent drop in sales for Q1 2011 with a net loss of $328 million. It blames a strong yen, but the real culprit is lousy sales of the Nintendo 3DS handheld game machine. Nintendo took a first step toward stanching the blood by dropping the price of the 3DS from $249 to $169 -- one of the smartest moves it could make.

Here are two other things it needs to do -- and quickly -- to get on top again.

Accelerate the launch of the Wii U
The Wii U was shown to mixed reviews last month. The biggest issue wasn't the system itself, but the fact that Nintendo isn't going to release the long-awaited follow-up to its best-selling Wii console until next year. Industry buzz is putting the release date sometime in late 2012.

Let's face it: Nintendo can't just push hardware development up a year -- the system shown at the Electronic Entertainment Expo was restricted to tech demos, so the console is far from complete. Nintendo will miss this year's crucial holiday season.

But the company should do whatever it can to get the Wii U out much earlier next year. Summer 2012 would be ideal, as it would prevent the Wii U from being eclipsed by any buzz coming from another Apple (APPL) iPad -- probably in March/April -- and give third-party game company several months to learn the hardware so they can produce some great games for the holiday season.

Furthermore, potential Wii purchasers are probably going to wait for the Wii U instead of buying a Wii now. The bigger the gap between now and the Wii U release, the worse Nintendo's financial picture is going to get.

Work more with Apple
Last month Nintendo released its first Apple iOS app, Pokemon Say Tap? BW. More accurately, as Nintendo has been quick to clarify, the Nintendo IP-holding The Pokemon Company published the app.

Either way, releasing apps on competing systems is wiser than it sounds. The limited gameplay in the Pokemon iPhone app gives gamers a taste of the full experience available on the more robust Nintendo 3DS. It also gives Nintendo access to literally hundreds of thousands of mobile gamers.

The same app strategy could be applied to the iPad, too, especially since the Wii U will have a tablet-based interface. An app released earlier on the iPad could build some buzz for the full Wii U titles.

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