Dear Nintendo: How low can you go?

Nintendo tried to sweeten the news of its dramatically disappointing financial results, announced earlier today, with a pre-emptive price cut of the 3DS, but the outlook for the company is still grim. Adoption of the 3DS has been underwhelming, with a mere 830,000 sold in the US since its March 2011 launch. The specter of the PS Vita has been name-checked by many already today as one potential reason for consumer reticence, but there's more to Nintendo's struggle than Sony's incoming uber-handheld.

Interestingly, Nintendo was flagged up as a company "getting things right" last week, with EA's CEO John Riccitiello suggesting to IndustryGamers that in the Wii U "Nintendo is bringing out a new platform that brings together some of what we're learning from new media and new platforms like the iPad and then integrating that with a console. It's the perfect time for that in the industry." That may be the view from the developers' side, but it seems users think differently. Nintendo blamed a shortage of "hit" titles for the 3DS platform, and it's not hard to see that for the casual gamer, the rapidly-updated contents of the App Store and Android Market present a far more accessible, rewarding experience.

The big competition isn't from dedicated gaming devices such as the PS Vita, but hugely popular multi-purpose devices like Apple's iPod touch. It's no accident that, at $169.99, the 3DS significantly undercuts the entry-level iPod touch (at $229) whereas, before, Nintendo demanded more money for arguably less functionality. As we noted in our review, too, there are a growing number of 3D-capable smartphones that offer gaming among plenty of other abilities.

Nintendo has worked hard to broaden the 3DS' appeal since its launch, updating the handheld with the eShop and pushing out Netflix streaming video support. It also has a more impressive list of high-profile games expected later this year: Star Fox 64 3D, Super Mario 3D Land, Mario Kart 7 and Kid Icarus.

So where can Nintendo go next? One option is further discounts; after all, iSuppli pegged the 3DS at costing just over $100 to produce when it launched, and that figure has probably crept lower today. Nintendo might be insistent that it has no intention of getting into the smartphone game business, but it could certainly borrow its subsidy model. Just as Logitech is hoping with the now-$99 Revue, a substantial cut to the 3DS' price tag might persuade reticent gamers to take the plunge: the 3DS is little use to them if they don't then subsequently buy games.

By opting for the $170 price point and throwing free titles at 3DS buyers, Nintendo is ironically doing just what company president Satoru Iwata warned that the games industry was moving toward: devaluing software. Better, perhaps, to shave away at the hardware cost instead, reduce the "either/or" attitude where people choose either an iPod touch or a 3DS. It's easier to sell to people if they've already walked in through the door. The continually strong sales of the DSi and DS Lite – which put 3DS demand to shame, despite being previous-gen hardware – show there's an appetite out there for Nintendo's brand of gaming. Maybe it's time Nintendo put its money where its mouth is and threw wide the doors to let those people in.