LCD supply to affect Nintendo profit

Nintendo Co says tight supply of liquid crystal display (LCD) panels will hurt the profitability of its upcoming dual-screened handheld game machine, the DS, due out this year.

Nintendo President Satoru Iwata said he hoped main supplier Sharp would work with the company to ensure a steady flow of LCD panels for the DS, which comes with two displays that are 7.6cm wide.

"Ordinarily, if we said to a supplier that we plan to make a product with two screens, they would be happy, but this time they said, 'Two screens, that's a bit of a challenge,"' Iwata said on the sidelines of E3.

"Of course we have no intention of taking a huge loss in the beginning, but I'm not sure if we can efficiently boost profit from the start like we did with the Game Boy Advance, but this is something I think we can repair with time."

LCD makers have had difficulty keeping up with booming demand for digital electronics such as mobile phones and digital cameras that rely on the panels, leading to fears of a supply crunch.

One of the DS screens is touch sensitive, allowing gamers to use a pen-like device to play instead of just directional keys and buttons. It also comes with wireless capabilities to allow multi-player games.

Nintendo did not say how much the DS would cost but promised it would be "affordable" when the device goes on sale in the United States and Japan later this year.

Nintendo targets a European and Australian launch by March 31 next year.

Kyoto-based Nintendo dominates the handheld game market with a share of about 90 per cent, but it faces its most serious challenge to date from Sony with the upcoming launch of PlayStation Portable (PSP).

Earlier, Sony's US games unit head, Kaz Hirai, said that he did not expect to make money on the PSP at launch, due to the price of components and initial development costs.

Sony plans to ship three million PSP units in the business year ending March 31.

Iwata, a former game developer, also offered some clues about his vision for Nintendo's next-generation game console that he has pledged will represent a "gaming revolution".

"We invented the current way a console is played - in front of a television and holding a controller - but maybe that image will change," Iwata said.

Nintendo's current home console suffered from intense competition with Microsoft's Xbox and Sony's PlayStation 2 until a September price cut in the United States triggered a spike in sales.

Iwata said Nintendo planned to continue promoting GameCube for at least two more years, adding that there were some attractive titles on the horizon for the game machine.

Specifically, Iwata pointed to a new version of Legend of Zelda, one of the best-selling games of all-time, that is being created by Nintendo's game developer Shigeru Miyamoto, who is known as the "Father of Mario". The game is due out next year.

"I just hope Miyamoto can quickly complete the game," said Iwata, adding "with good quality, of course".