<div style='font: 9pt ; text-align: left; '>Nintendo at no point said "we can't compete", they said "we're not in the same market". There's a HUGE difference in those statements. It has been twisted by the anti-Nintendo people to mean "we can't compete". Take personal opinion out of this for this particular discussion. It makes no difference what system anyone here prefers. It's a market issue. Sony and Xbox are competing for the set-top box market, Nintendo just wants games. It might seem like a minor difference, but it's not. When it comes to games they compete, but there's other factors for Sony and Microshaft, like the digital cameras, keyboards, hard-drives, etc. They're trying to make their systems do much more, Nintendo isn't interested in that, it's not what they do. If they tried, they would bankrupt the company. But when it comes to the games market, they're a powerhouse. They'll let Matsushita (Panasonic) worry about that (who, BTW, is the biggest electronics company in Japan, not Sony), that's why they partnered with the hardware (good move, massively cut down the manufacturing costs of the games and the disc drives). So, they might be in it in a very indirect way, but they're not really in the same market as Sony and Microsoft. It's like saying a Toyota Corolla and a BMW M5 (the sports car) are in the same market. They're both cars, but they're different markets.
That's the point. Nintendo knows it can't compete with Sony and Microsoft when it comes to an all-encompassing, set-top box market, nor are they pretending to. But if you're talking about the games market, not only can they compete, they're a powerhouse, and everyone knows it. The figures proved that, they more than doubled the second-place publisher, which was EA, in software and they're actually breaking even on the 'Cube hardware now and will be making money on it by the end of the year. Let's see when Microsoft (never) and Sony (3-4 years) will start making money on their systems. Also, if the Japanese analysts are correct and Nintendo does capture 30% of the market there, they'll have not only massively increased their market share in their home territory but also firmly established themselves as the powerhouse they used to be again in their now market (from a personal publisher and hardware revenue standpoint, which is what all companies and shareholders care about).
And that's what business is all about, making money. Don't just look at the figures and say "Sony sells 50 million games and Nintendo only 10 million", look at it from the standpoint where "how much money is Nintendo making vs Sony". Just because you have 5x the revenue it doesn't mean you have more profit, and profit - well, net income after taxes - is what business is all about.</div>
I was there on that fateful day, were you?