If the Wii were still cool, Nintendo (OTC: NTDOY) wouldn't have had to take a heavy hand to its full-year earnings forecast. The company's profit fell 52% year-over-year for the past quarter, due in large part to a decline in the game's popularity. Demand has slipped, with Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) gaining ground with the core market of zealous gamers. Also, it's seen its position eroded by Apple's (NASDAQ: AAPL) iPhone, which is picking up some momentum as a gaming platform.

Nintendo's Q3 operating profit dropped to JPY64 billion ($709 million), falling far short of the analyst estimate of JPY90 billion. For the year ending March 2010, the company has chopped its forecast to JPY370 billion, far lower than the analyst expectation of JPY442.8 billion.

After dominating the gaming industry for the past three years, Nintendo's Wii gave up its position in the top spot to Sony's PlayStation 3 last month. The company has also been hurt by an increase in the value of the yen, which has hurt all Japanese exporters. Yet, even by local standards, Nintendo isn't measuring up. Its stock price is down 28% this year, compared to a 14% increase in the Nikkei 225.

The video-game sales report for the month of March is in. The NPD Group, a market-research company, said that sales of hardware and software jumped 57% compared with March of last year, coming in at $1.7 billion. Hardware revenue grew 46%, while software sales leaped by 63%. One of the best analysts of the video-game sector, Michael Pachter of Wedbush Morgan, thought that software sales might increase 47% from last year.

That's okay, though -- video games certainly have the right, as well as the ability, to surprise to the upside, especially when Nintendo (OTC: NTDOY) released the incomparable Super Smash Bros. Brawl for the Wii in March. I don't think there's one soul on the planet that didn't expect that title to be tops in March -- it sold 2.7 million units. Seriously, many gamers are addicted to this. I know one individual who still plays several rounds of smash-brawling antics twice a day! The title definitely drove Wii sales -- the console sold 67% more units in March than it did in the previous month.

The data continue to show that video gaming is hot, and that quality publishers such as Electronic Arts (NASDAQ: ERTS) and Activision (NASDAQ: ATVI) should be investigated as potential ideas on pullbacks. However, I think Nintendo is the bigger one to look at now since the Wii continues to do well and since it has an interesting putative catalyst coming up in May with the Wii Fit exercise system. Of course, you may just want to look right now. 'll like Nintendo's stock a whole lot better if it gets below $60 per share. No matter what, though, the company is still giving Sony (NYSE: SNE) and Microsoft (NASDAQ: MSFT) a nice run for their collective money. With the DS, the Wii, Mario, etc. -- Nintendo certainly commands respect, I'll say.

Disclosure: I own shares of Activision; positions can change at any time.

Although consumer electronics retailer Circuit City Stores, Inc. (NYSE: CC) is teetering on the brink of a buyout or doomed to failure, at least some areas of it appear promising. This time around, the company has announced that it will get involved with the used video game industry. You heard that right.

Instead of focusing efforts on trying to improve its retail competitive position and somehow out-maneuver competitor Best Buy, Inc. (NYSE: BBY), Circuit City will position itself as a sort of flea market. It's true that the used video game industry is chalked up at a $1.5 billion-a-year industry, that's a niche currently being filled by game specialty retailers like GameStop Corp. (NYSE: GME) and eBay. But this move is a sign that Circuit City is willing to do something -- anything -- to revitalize any product category that it can.

If Circuit City can really make this effort stick, then it may succeed in actually getting more shoppers in the doors. But video game buyers and traders are a fickle lot and will instantly sense if the retailer's pricing, availability and breadth of titles are going to give the competition a run for the used-video-game money, or if this is just another ploy to improve traffic numbers (as some of these customers will invariably shop for more than video games).

According to November sales figures just released, the Nintendo Co. Ltd. (OTC: NTDOY) Wii gaming console was outsold in Japan by the much pricier PlayStation 3 game console made by Sony Corp. (NYSE: SNE). The exact opposite has been happening in the U.S. market for the entire year of 2007, but it did take Sony until the later part of the year to surpass Wii sales. Will it last in Japan?

This research comes from market research firm Enterbrain, which said that the PlayStation 3 outsold the Wii in the last three weeks of November. What this indicates is that Sony's new push into a lower-priced entry for the PlayStation 3 may in fact be helping it bring in sales.

Pricing moves seem to always do this when it comes to consumer electronics. In October, Sony cut the PlayStation 3 price and then followed up that welcomed move with a new bundle in November that brought the price down to under $400. With the holiday season in full swing, this was timed perfectly, although even the newer PlayStation 3 price is way ahead of the $250 price of the Wii.

While the Nintendo Wii sold over 150,000 consoles in November, the PlayStation 3 has totaled over 183,000 unit sales so far. In third place was the Microsoft Xbox 360, which has sold over 35,000 consoles in Japan through the end of November.

Nintendo is up to its market-taking tactics again. The Japanese game console manufacturer has unveiled the "Wii Fit" game that encourages physical activity instead of sedentary thumb-pressing and alien-destroying movements. From the outset last November, it seems that Nintendo's market intention was to price its game console hardware lower than both Microsoft's Xbox 360 and way below the Sony PlayStation 3 and engage its players with more than visual and technologically-advanced eye candy.

Recent unit shipment numbers confirm that Nintendo's strategy is working, if not for the lower price alone. The Wii's "Balance Board" comes with the game and features sensors that detect weight and balance as the player moves and gyrates to simulated physical activity on the television in front of them. For a nation filled with obese kids (and adults), something like this is a very innovative way to turn a regular video game situation into a space-saving complete body workout.

Why aren't we seeing this kind of strategy from Microsoft and Sony Corp. (ADR) (NYSE: SNE)? Well, it's too late for both of those consoles, most likely. I'm sure Microsoft Corp. (NASDAQ: MSFT) will have similar game titles that encourage physical activity and movement, but with the early lead and consumer reputation the Wii has built in less than a year, I'm not sure the competition will make any dents. Now, if Microsoft drops the Xbox 360 price to a Wii-matching $250, we may have some competition. However, I don't see that happening since the company is already losing money selling the Xbox 360 for $400.

Nintendo Co., Ltd (ADR) (OTC: NTDOY) has taken the gaming console world by storm with a combination lower-price and highly-interactive "Wii" gaming platform that has sent Microsoft Corporation (NASDAQ: MSFT) Xbox 360 and Sony Corporation (ADR) (NYSE: SNE)'s PlayStation 3 to the back of the line since late in 2006. Nintendo seems to have a knack for paradigm shifting, as its $250 Wii gaming system combines high levels of physical player interaction along with a highly-enjoyable gaming experience. It's not the most technologically-advanced gaming system out there, but Nintendo seemed to know (before anyone else) that geek-specs like graphics and polygon count mean very little if the games themselves don't draw players into the environment. It's like the difference between watching a movie on a 19-inch TV screen and seeing a Broadway play from the tenth row (you get the idea).

Nintendo, though, is not resting on its laurels as Microsoft is wooing moms and others with more family-friendly games as well as making it easier to find gaming titles meant for younger audiences via re-vamped in-store displays. Yes, there are more markets for gaming outside of the teenage and twenty-something male set. Surprised?

This is precisely what Nintendo did with the launch of the Wii gaming console back in November of last year, and that strategy has worked perfectly for the Japanese company. By appealing to more of a mainstream audience (like sports players, parents and even the elderly), the market for Nintendo's Wii goes far past the tech-gamer set that higher-end gaming consoles generally try to court right out of the door. Contrast this to Sony's PlayStation 3, which is so advanced and pricey, it's cornered itself into a severe niche -- and the niche market where it's lumbering is just not enough (yet) to get it selling where Sony can actually make some money with the thing. Maybe it never will, although the original PlayStation consoles took years to build their own highly successful franchises. Nintendo, though, has already built its "Wii" little empire and it's getting larger by the month.

In the Sony (NYSE:SNE) PlayStation 3 game "Resistance: Fall of Man," members of a ragtag human army stage a bloody shootout with an alien enemy inside the Church of England's legendary Manchester Cathedral. Displaying a shocking disregard for the rights of virtual contestants to slaughter one another, the Church has voiced a strong protest over the use of its cathedral as a setting for the mayhem. It has demanded an apology and deletion of the cathedral from the game, with the possibility of a lawsuit if the company does not comply.

The Druids were reported to be watching the controversy with interest, reserving the possibility of filing suit against a multitude of companies that have used the image of Stonehenge in their marketing. (Joke)

Personally, I'm wondering how much money Google (NASDAQ:GOOG) makes from links from Google Map searches of my neighborhood, in which my house appears. If the COE wins, I wonder if I could use the precedent to pursue a lawsuit of my own?

While the dismal performance of Sony's (NYSE: SNE) PlayStation 3 continues to weigh on the company's fortunes, the competition is making waves all over the place. First, the scrappy Nintendo has outdone everyone and has shown that consumer engagement means much more than technical performance and brilliance. The less-advanced Nintendo Wii has outsold the Sony PlayStation 3 for almost the entire time both gaming consoles have competed (since November of last year), and the numbers for the Wii continue to add up while the PlayStation 3's numbers are hunkering down looking for an escape from any media coverage.

Meanwhile, Microsoft's (NASDAQ: MSFT) Xbox 360, which was priced in the middle of the Wii's ($250) and the PlayStation 3's ($500 and up) price points has sold very well during the same six-month time period, trailing the Wii but ahead of the PlayStation 3. Adding fuel to this fire, Microsoft has announced executive David Hufford said the sweet spot of the market that it will drop the price of the "core" Xbox 360 gaming package is only $199 -- a drop from the previous $299. Was this price drop in Microsoft's business plan? Probably so -- but the company may have had to accelerate the drop based on how well the Wii is performing in sales compared to all the competition.

So there you have it -- the Microsoft Xbox 360 is now at $200 and the Nintendo Wii is at $250. I doubt Sony can even drop the PlayStation 3 price without completely losing its shirt, so I don't see any price drops on the PlayStation 3 in response to Microsoft's price cut, unless Sony is fond of kamikaze pricing schemes. So far, estimates have the Nintendo Wii selling 360,000 units per month, the Xbox 360 selling 174,000 units and the PlayStation 3 selling at an 82,000 per month clip.

[Update: this Xbox 360 price cut has been officially denied as of 6-12-07 -- but we still wonder, when will the price drop?]

Ken Kutaragi, the chief mind behind Sony Corporation's (ADR) (NYSE: SNE) enormous PlayStation empire, will be leaving the Japanese electronics giant in June at the company's next annual shareholder's meeting. According to many industry pundits, the failure of the PlayStation 3 to almost immediately become world dominant was the impetus that made Kutaragi step down (more than be asked to leave).

The PlayStation franchise has been enormously popular for Sony and has led to the sale of 200 million gaming consoles worldwide. The decision to include a next-generation DVD player (Blu-ray) into the PlayStation 3, though, was a mistake that added hundreds of dollars to the console's price. In effect, the $599 price (for the upscale model) was out of reach for many and the console's sell-through has been a tad dismal to this point because of it (and possibly other reasons)

Meanwhile, Nintendo Co., Ltd's (ADR) (OTC:NTDOY) "lowly" Wii gaming console has taken the gaming world by storm, outselling both the PlayStation 3 and Microsoft Corporation's (NASDAQ: MSFT) Xbox 360 by a wide margin. It comes down to engaging customers (players) emotionally instead of having the highest-tech onboard, and Nintendo knows this. While Kutaragi will go down as Sony's most important executive (possibly ever), his latest creation may continue to flop and die a slow death. Although, it's only been six months since the PlayStation 3's release -- is the market (as always) just looking for instant gratification here. But, if Sony can't recover from the PlayStation 3 mess, will CEO Howard Stringer be the next one to "step down"?

While the gaming world watches sales and availability of Sony's PlayStation 3 very closely, competitor Microsoft Corporation (NASDAQ:MSFT) is constantly trying to deflate the wind from Sony's sales by apparently crashing its launch parties around the world with its Xbox 360 game console along with vivid demonstrations of the large price gap between the two game consoles.

Sony is in the midst of launching the PlayStation 3 console in Europe, Australia and New Zealand -- but according to reports, the initial furor Sony saw in the U.S. last November upon the PlayStation 3 launch is not happening in other parts of the world. To top off soft initial sales at launch time in different global markets, Microsoft is adding insult to injury by having (directly or indirectly) jabs poked at Sony in some pretty memorable ways.

Take Paris, where a waterside PS3 launch venue saw a giant boat float by with "Xbox loves you" draped over the side. In Australia, the retailer Gameplanet had a nice Xbox 360 display surrounded by quite a few cases of beer to demonstrate the cost difference between the PlayStation 3 and the Xbox 360. Microsoft seems to have gotten pretty inventive with its competitive marketing here, which is odd considering Microsoft's operating system marketing is decently pathetic most of the time. But when it comes to marketing its gaming console, it's quite a different story.

[Disclosure: I own MSFT shares as of 3-26-07]

Our friends over at Joystiq explained recently that consumer electronics retailer Best Buy Co. Inc. (NYSE:BBY) has dropped the Sony Corp.'s (NYSE:SNE) PlayStation 3 model with the 20GB hard drive due to very lackluster sales performance. Keep in mind that this unit, like its big brother with the 60GB hard drive, has only been on the market since November of last year. The nation's largest consumer electronics chain has dropped one of the two Sony PS3 units in under six months.

While I'm still skittish on whether the PlayStation 3 will be a flop for Sony (there are many conflicting reports, of course), this situation does not bode well for the electronics giant at all. With the $500 video game console crowd is probably now shrinking (we're past the early adopter stage), the only way more folks are going to purchase the PS3 now is because of its compelling content that is being released. That will be the measurement stick throughout 2007.

What can Sony do here? It's probably a decent guess that if Best Buy saw minuscule sales of the Sony PS3 20GB model, most other retailers have seen the same thing. Will this lead to other retailers dropping the SKU as well? Will this mean that Sony may discontinue the 20GB console this year sometime, leaving it with a single retail SKU for its flagship gaming console? All eyes will be on Sony for this one I'm sure.

Although it's been predicted that Sony Corp. (NYSE:SNE) would have to lower the price of its new PlayStation3 game console to reap the benefit of mass adoption, the company may have to do that way before it was ever planned.

True, technically, the Sony PlayStation 3 is quite a bit ahead of the Nintendo Wii and possibly even ahead of the Microsoft Xbox 360 (debate rages on here). But Sony can't rest on as an excuse that all but a few extremely avid gaming fans are going to care. The processor, graphics, pixel shading and other technical benefits are lost on most of the gaming audience who would rather feel an immersive gaming experience in totality -- not a few more millions of polygons being drawn a second. And yet it seems that Sony is placing its future the entire company's turnaround from a disastrous past few years in the hands of the tiny minority who do care about the technical features.

Case in point here -- the Nintendo Wii (half the price of the PlayStation 3) is outselling Sony's unit 4-to-1 and even a 5-to-1 in some countries, including the U.S. and Japan. Most likely, this is due to Nintendo's capability to price the unit at the correct mass adoption price point -- $250 -- while delivering an experience that is good as or better than Sony's (not just graphics, but total experience).

There will be some who argue about Sony's high price killing its early sales -- and there's quite a bit to that too -- but can Sony even afford to drop the price in 2007? I hope Sony's future doesn't rely on that or SNE investors may see a partial Titanic scenario coming.

Since Sir Howard Stringer was named CEO of Japanese electronics giant Sony Corporation (ADR) (NYSE:SNE), the company has had a few decent product launches and has hinged part of its future on the success of the Sony PlayStation 3 gaming console. But has Stringer delivered all that Sony market pundits and investors have come to expect? In many ways, no.

The launch of the PlayStation 3 featured a much lower volume of consoles than was originally expected and Sony ended up recalling millions of notebook batteries that had problems with possibly exploding (It supplied the cells for Dell's battery recall as well -- the largest in consumer electronics history). Sony-backed Blu-Ray hi-def DVDs have filed so far to win over large amounts of customers -- probably due to the price and the ludicrous fighting with the HD-DVD camp over the standard. We all can't just get along, apparently.

Add that to the fact that many of Sony's products remained oddly steeped in the land of proprietary connections and memory card formats (Memory Stick, anyone?) and it's just amazing...no, make that not so amazing... that Sony has continued to stumble in the era of open standards, well-built products and timely releases. And Sony -- don't install software on the computers of your customers without their consent, ok? Please?

Just a few months after being introduced to the U.S. market, the largest consumer electronics retailer in the country will be reducing the prices of games for both the Sony Playstation3 and Nintendo Wii soon, according to the company.

In fact, just this week, Best Buy Co.,Inc. (NYSE:BBY) has introduced new discounts on gaming titles for both platforms. That was certainly quick -- and interesting. Several games have been reduced from $59.99 to $49.99 -- which should have been the correct price point in the first place. $60 for a mass market game is just too high. But millions of gaming fans are paying those prices right now regardless.

In a rather standard move, not only have retailers embargoed consoles to boost sales in an advertising and word-of-mouth frenzy, they have held select sales for PS3 and Wii game titles to boost interest -- and this recent move by Best Buy qualifies. Other than Best Buy, Target Corporation (NYSE:TGT) just discounted certain PS3 game titles to under $40 and Circuit City Stores, Inc. (NYSE:CC) advertised New Year's sales for Nintendo Wii titles at under $40.

Sony Corporation (NYSE: SNE) has announced that it has shipped one million Playstation 3 consoles in the U.S. from the day it launched in late November 2006 to the last day of the calendar year. Early reports said that Sony -- which was plagued with supply issues that forced it to make fewer initial consoles than it had hoped -- would sell only 800,000 consoles by year's end. So, it shipped over a million -- but how many sold?

Right now, the Playstation 3 is hard to find at stores and online. Nevertheless, Sony's shipments of one million PS3 consoles in the U.S. fulfilled half of its goal to ship two million PS3 consoles worldwide in 2006. Sony did not break out numbers to say how many global units it had sold in 2006 -- it just reported U.S. numbers shipped this time around.

Sony reported that it sold 197,000 PS3s on launch day, less than half of the 400,000 it had initially forecast. With the Microsoft Xbox 360 already on the market for a year and with the Nintendo Wii selling 476,000 consoles in the two weeks following its November 19 launch -- two days after the PS3 launched -- is Sony headed for a huge disappointment? I doubt that, but 2007 will be an interesting time for its CEO, Sir Howard Stringer.