Nintendo didn't do itself any favours by pretending it wasn't even aware that the iPhone existed, let alone acknowledging it as a threat. However, in a recent conference call the Japanese gaming giant announced that it's anticipating its first drop in profits for four years, citing the harsh competition from Apple's devices as one of the reasons.

The drop in profits doesn't bode well for the public acceptance of the DSi or its answer to the iPhone's App Store, DSiWare. But it's undeniably encouraging to know that Nintendo is finally taking the competition seriously, rather than following the modern corporate trend for burying its head in the sand and attempting to convince share holders that the opposition doesn't exist.

Hopefully, this short sharp shock will help to kick Nintendo into gear with its digital distribution service before Sony makes a big push with the launch of the PSPgo.

In a rather political move, however, Nintendo made absolutely no mention of Sony as a competitor or threat. Ouch.