Nintendo has already admitted that sales of its 3DS handheld are lower than expected, so the company’s announcement of a Nintendo 3DS price cut isn’t a huge surprise.

But boy, is it ever a price cut. Starting August 12, the cost of a Nintendo 3DS will fall from $250 to $170, making for one of the sharpest price drops in handheld history.  This also makes the 3DS a mere $20 more expensive than a Nintendo DSi, unless Nintendo announces discounts for its 2D handheld in the coming weeks.

Early adopters who paid $250 for the 3DS will get 10 free NES Virtual Console games starting September 1 and 10 free Game Boy Advance games by year-end.

In April, a Nintendo financial report said that 3DS sales weren’t meeting expectations. Strangely, the report didn’t mention smartphones and iPod Touches as a possible factor, instead saying that people don’t understand the value of glasses-free 3D and perhaps aren’t aware of the depth slider that adjusts the intensity of 3D images. The report also cited a lack of 3D content and consumers’ unawareness of additional features, such as augmented reality and StreetPass.

I’m not sure how a price drop addresses those issues, although I suppose if you’re in the market for a Nintendo DSi, you might be tempted to spend an extra $20 for the 3DS instead. And if you were enamored with the 3DS but simply couldn’t afford it, the price cut will certainly help.

Still, Nintendo’s long-term problem for the 3DS will be competing with free and cheap smartphone games. The company knows this — Nintendo of America President Reggie Fils-Aime has called these apps “one of the biggest risks today in our industry” — but is reluctant to lower itself to the same level. Although the 3DS has a downloadable game store, but it’s been criticized as a weak point with poor organization and a dearth of content. Nintendo can lower the price of the hardware all it wants, but a reliance on $40 retail games will continue to be a sticking point.

 
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