When you think about which companies are the biggest competition to Nintendo, you naturally think of Microsoft and Sony, but it seems that isn’t how the famous makers of Mario games see it these days.  If you ask them, they’ll tell you it’s Apple with its iPhone.

There is no denying that Nintendo is still seeing a lot of success with the Wii and its line of DS handheld units, but the company did see a rather precipitous decline in profits recently.  Although the company warned of a decline, it was still jarring to see profits fall from $3.03 billion to $2.48 billion.  The first inclination would either to be to blame Sony and Microsoft, but it seems that executives feel it’s Apple.

wii vs iphoneIn a story from the Times of London, It is reported that atoru Iwata, the president of Nintendo, recently told top executives that he sees Apple as the “enemy of the future”.  While hardcore gamers have not exactly raced to purchase Nintendo’s products as of late, the company decided to take a completely tact in the newest generation of consoles and go after demographics video games have not traditionally appealed to: teenage girls and men aged 30 to 40-years-old.

In recent surveys, those two mostly untapped demographics have been saying that they would rather carry an iPhone in their pockets for casual gaming than a Nintendo DS, and that is what is causing Nintendo concern.  Besides tapping two specific groups of people, Nintendo has proven there is a very viable market for casual gaming options.  While Sony and Microsoft both went the traditional routes with the Playstation 3 and the Xbox 360, both companies have also started exploring the potential of more family type gaming options.  (Why do you think we’re getting the Playstaion Move and Project Natal?)

On the other hand, Apple had no baggage to deal with, and could start with a clean slate.  Looking over the current landscape of gaming, and releasing a phone that was lite on physical buttons, casual gaming was the obvious solution for the platform.

So what can Nintendo do to regain some of its thunder?  The biggest issue as I see it is people are getting much more concerned about convergence.  They are willing to sacrifice some capabilities of a device just so they don’t have to carry as many of them.  Just look at the rise in the number of phones adding higher resolution cameras as an example.  If they are looking for games to just pass the time, it is easier to whip out their phone and play a quick game of something than to juggle their phone in one hand and get out a Nintendo DS to play a game.

It is also a little less embossing to just play on your phone.  No one knows what you’re doing in that situation, while on the other hand, when you get out your DS or PSP, they know full well what you are doing.

If Nintendo doesn’t want to see its sales sink any further, my first thought, which may be a crazy one I admit, is to release a phone.  They certainly have a world of manufacturing and technological background to their name, I can’t imagine it would be that difficult for them to come up with one.  Make it so some games get enhancements by having a Wii involved, and you might have a hit on your hands.

Of course, Nintendo is also known for being innovative, so they may come up with a totally new idea that none of us have thought of, but a phone is the first place my mind goes.

What say you?  What can Nintendo do to fight off the oncoming onslaught that is Apple in the casual gaming category?