Nintendo does not open the doors of its gleaming white Kyoto tower to the press very often, so when Nintendo Company Ltd. President Satoru Iwata agreed to meet with GameSpy last month, it was an invitation that could not be refused.

Nintendo stands at a significant crossroads. While GameCube is still the number two console in Japan, it has dropped to third place in the North American and European markets. Game Boy Advance is the unrivalled leader in the portable market, but Nintendo will face a strong challenge in the form of the Sony PSP in 2005.

Satoru Iwata

During his meeting with GameSpy, Iwata-san was candid about his company's current situation, mistakes his company has made, and why he believes Nintendo will still end up on top.

One of the first topics of conversation was Sony's PSP. With its high-resolution screen and packed with processing power, PSP has the look of a genuine Game Boy killer. The response to PSP seems obvious -- a Game Boy Advance/GameCube hybrid that can play both GBA cartridges and GameCube discs.

This response is so obvious, in fact, that some joker created a seriously believable mock-up of a prototype device called "Game Boy Enhanced" and showed it on the Internet. Talk about your clever hoaxes, even people at Nintendo wanted to believe it.

So why not make a Game Boy Enhanced?

"Some time in the future we may be able to combine the technologies of Game Boy and GameCube in a unit that will be small and light with a long enough battery life and a low enough price for the market," Iwata said. "We [will] need to find a reasonable balance between the high-functionality and the other requisite features in a portable system.

"Timing is very important. Even if there are new technologies that will make portable games more fun to play, if the price is too high or the other requisites are not met, we say it is premature."

History agrees in this case. Shortly after Nintendo launched Game Boy in 1989, Atari launched Lynx. Lynx had higher-resolution graphics and a back-lit color screen. It also retailed for more than twice the price of Game Boy, burned through batteries at five times the speed, and had a smaller library.

Lynx died quickly and was followed by Game Gear, TurboExpress, game.com, Wonder Swan, Neo Geo Pocket, Nomad, and most recently Zodiac and N-Gage. All of these units (except maybe game.com) have had some form of technological advantage over Game Boy. None of these systems managed to cut into Game Boy's sales.

Along those same lines, Nintendo stands accused of letting the console market slip through its hands. Sony waltzed into the market in 1995, one full decade after Nintendo launched the NES in the United States, and walked off with 66 percent of the market. Now Microsoft has snatched away another 15 percent of the Western markets. And the latest rumor is that Nintendo may not even launch another game console in the future.