There's a clear reason why Nintendo so drastically dropped the price of the Nintendo 3DS. It, simply put, has not been performing well. In fact, it's been lagging behind Nintendo's "last generation" offerings, with DS and Wii hardware sales easily besting Nintendo's newest effort.
"The Legend of Zelda: Ocarina of Time 3D was launched and favorably received, but Nintendo 3DS had few other hit titles," Nintendo admitted in its latest earnings report.
The 3DS sold 0.71 million units in the last quarter, easily trailing the DS family's 1.44 million units. Wii hardware sold 1.56 million units.
Nintendo is blaming the strengthening yen, and research and development for the upcoming Wii U as factors for the poor performance this quarter, with operating losses at 37.7 billion yen (about $480 million).
Although the 3DS has been slow to attract a large audience, Nintendo believes the price cut will dramatically accelerate sales. The company is maintaining its forecast of 16 million 3DS system sales by the end of its fiscal year in March 2012.
According to analysts at Bloomberg Japan (via Andriasang), the price drop will mean that Nintendo will incur a loss on every glasses-free 3D system sold--a rarity for the company, which typically sells hardware for a profit. The move was called "necessary in order to improve fiscal performance next year and beyond."