Analyst unimpressed by DSi

Considering the numerous parties involved, be they manufacturers or software partners, keeping new hardware under one's hat until just the right moment is no trivial matter. Nintendo very nearly pulled that feat off with today's announcement of the DSi, which was spoiled only by an analyst's tip last November and a Nikkei Net report earlier this week.

The redesigned handheld is itself a redux of the 2004 original Nintendo DS, and boasts a number of notable features, including a 12 percent slimmer body, 17 percent bigger screens, and two cameras. The DSi will also dump the DS Lite's Game Boy Advance slot in favor of an SD card reader. It is expected to debut in Japan on November 1 for ¥18,900 ($179)--up from the DS Lite's ¥16,800 ($159) price point--with a global roll out to follow next year.

Though the device has been official for less than 12 hours, analysts are already weighing in what impact the new handheld will have on Nintendo. According to UBS Investment Research analyst Ben Schachter, it may not be as much of a boon as the Kyoto-based game company might like. In a note to investors today, Schachter predicted that the DSi's new feature list won't do much to grow the handheld's already sizable audience.

"The new functions to be added to the DSi are no more than minor changes, and as such are unlikely to expand the NDS user base, in our view," advised Schacther. "Demand is likely to centre on replacement. Additional functions may extend the software line-up but not by enough to further boost consumer spending. Body size will be smaller, but not enough to change convenience dramatically."

One other issue that the DSi does not address, notes Schachter, is the hardware's microprocessor unit (MPU). However, Schachter believes this fact may be good news for gamers looking for an all-new Nintendo handheld sooner rather than later. "As software capacity is growing, requiring greater hardware MPU capacity for handheld devices, we believe a full model change is needed to meet demand over the next three or more years."

Reporting on its April-June performance in July, Nintendo said that the DS and its 2006 Lite redesign have combined to sell more than 77.5 million units worldwide. However, the publisher's fiscal performance also indicated that interest in the handheld has begun to wane. Only 580,000 DSes were sold during the quarter in Japan, a dramatic drop from the 2.08 million sold during the same period of time a year ago.