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John Gruber elaborated and responded to some of the criticism about his position that Nintendo should make iOS games:

Here is what I’d like to see Nintendo do.

Make two great games for iOS (iPhone-only if necessary, but universal iPhone/iPad if it works with the concept). Not ports of existing 3DS or Wii games, but two brand new games designed from the ground up with iOS’s touchscreen, accelerometer, (cameras?), and lack of D-pad/action buttons in mind. (“Mario Kart Touch” would be my suggestion; I’d buy that sight unseen.) Put the same amount of effort into these games that Nintendo does for their Wii and 3DS games. When they’re ready, promote the hell out of them. … Sell them for $14.99 or maybe even $19.99.

It’s a good idea, and one that Nintendo should probably do. But that’s not the problem.

I wrote about Nintendo’s predicament in 2011 and again earlier this year, and my theory remains:

Nintendo needs the profits of the high end, but they can’t compete there anymore. All of the growth is happening at the low end, which is mostly games that they can’t or won’t make. And even if they succeeded in casual gaming, it probably wouldn’t bring the kind of profit that they need.

I’ve previously argued that Nintendo shouldn’t make iOS games because it wouldn’t bring in enough money to solve their problems. But I was always thinking of making iOS games and making their own hardware as mutually exclusive. Gruber makes some great points that have convinced me that Nintendo could do both, and I no longer believe their theoretical iOS games would harm their hardware business.

Over the last few years, I’ve learned a lot about competition. The biggest lesson has been that in most cases, products and companies live and die by their own actions, not their competitors’.

Apple didn’t almost die in the ’90s because Microsoft was competing well: they almost died because their hardware was overpriced and their operating system was primitive and archaic.

Sega’s hardware business didn’t die because Nintendo and Sony kicked its ass: it died because Sega threw away the Genesis’ tremendous fanbase and success by sloppily releasing the Sega CD, 32X, and Saturn, all of which were overpriced, uncompetitive, and poorly supported by game developers and Sega itself. By the time the relatively good Dreamcast was released, most fans and game developers had lost all faith in Sega and moved on to other systems.

Nintendo’s strongest asset and greatest enemy has always been itself, its history, and its spotty record for making important decisions. Their hardware business is going to succeed or fail on its own, regardless of whether they release any smartphone games. Many people willing to pay a good price for a Nintendo iOS game would gladly also buy a Nintendo console or hand-held if it was good enough. And Nintendo still needs that, because they’ll make far more profit by selling people piles of $40 controllers and $25 plastic accessories than they could ever make on a $7.99 iPhone game.

The problem is that we aren’t seeing much evidence that Nintendo can produce any more hardware that’s good enough to compete with ubiquitous smartphones, cheap tablets, and their increasingly attention-competitive world of non-gaming killer apps.