Nintendo pressure as rivals up ante

NINTENDO, creator of software icon Pokémon and a major player in handheld and home games consoles, is talking up its chances of a good year after reporting solid first-quarter numbers.

Despite the hype, questions are stacking up about the rising competitive threat from rivals Sony and Microsoft.

The company said group net profit between April and July was 11.45bn yen (£59m). While there were no comparable year-ago figures, it admitted one-off currency gains accounted for close to two thirds of this year's first-quarter sum.

For now, Nintendo's senior managing director Yoshiro Mori is sticking to a full-year profit target of 65bn yen, underpinned by sales of six million GameCube consoles and 20m handheld Game Boy Advance units.

Analysts say those numbers may be hard to meet. Microsoft's Xbox and Sony's Playstation 2 have already raised the pressure on the home console market, a segment Nintendo once dominated.

Nintendo, which shipped only 80,000 GameCubes between April and June, has already halted production of the consoles to clear a build-up of inventories. The backlog may be shifted by autumn - but an even more serious threat may come in the handheld console market.

Despite problems, Sony is trumpeting the launch next year of the PSP, its own handheld offering. Market watchers say this could ultimately deprive Nintendo of leadership in handheld sales, leaving it increasingly to rely on software offerings.

Nintendo's president Sotoru Iwata is to deliver a long-range strategy briefing on Thursday, With the handware challenge now apparent, it will be an interesting session.