Nintendo Didn’t Expect 3DS Sales to Drop Like This

Nintendo was caught unawares by surprisingly slow sales of the 3DS, the company said Tuesday.

“Nintendo 3DS has not been selling as expected since the second week [of availability in the United States and Europe], and this is not just in the Japanese market but also in the United States and Europe, where no direct impact from the great earthquake has occurred,” Nintendo President Satoru Iwata said during an investor briefing in Tokyo. “Therefore, we recognize that we are in a situation where we need to step up our efforts to further promote the spread of Nintendo 3DS.”

Nintendo launched the 3DS, which features a glasses-free 3-D display, in February in Japan, and in March in the rest of the world. At $250, it is by far the most-expensive handheld the company has ever released.

The company said Monday it had sold 3.6 million units of 3DS worldwide through the end of March and expects to sell 16 million units of the device over the next year.

Wedbush Morgan analyst Michael Pachter said in an e-mail to that Nintendo needs to release better 3DS games or lower the price of the device.

“I think this could change if some compelling software comes out, but I am frankly surprised at the tepid reaction” consumers have had to the new handheld, he said. “I truly thought that the fanboys would snap these up at any price” based purely on the 3-D graphics, he said, although he now thinks the new technology is insufficient to justify the $250 tag.

Iwata acknowledged that impressing consumers with the 3DS’ array of features has been difficult. It is a challenge to get users to understand the appeal of the screen even when they get their hands on a unit, since improper positioning of the adjustable 3-D slider might cause them to not see the image properly. Iwata also said that not all Nintendo 3DS owners have been using onboard software like StreetPass Mii Plaza.

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