Nintendo's hard choices for a soft landing

But with that Wii boom waning, the successor being prepared by the creator of Super Mario looks like a losing proposition as Apple Inc and other smartphone and tablet makers take gaming to the bathroom, the commuter bus and back to the bedroom.

Nintendo will report on Thursday its first ever operating loss, after estimating a 45 billion yen deficit for the business year just ended.

"They have been beaten by smartphones and tablets, in particular, for consumers spending and, more importantly, time," said David Gibson, an analyst for Macquarie in Tokyo.

The company, which began in 1889 making playing cards in the back streets of Kyoto, has been hammered by a precipitous drop-off in sales of its Wii, DS handheld console and its new 3DS version.

A year ago Nintendo expected to sell 13 million Wii consoles, 16 million 3DS handhelds and 11 million DS machines in the financial year. In January it slashed its sales target for all three, lopping 3 million off its Wii target, 2 million off 3DS and halving its prediction for the DS.

Promising to return his company to profit this business term, Nintendo's boss, Satoru Iwata, blamed dismal sales on a strong yen and economic gloom in Europe. No strategic rethink or change to plans for the new Wii console, the Wii U, was necessary, he insisted.

Yet what Nintendo faces is a fundamental shift in gaming habits that analyst argue may require it to shrink its hardware business and instead chase profits for Super Mario and other game titles on devices built by other firms.

Its emerging foe is Apple