UPDATE 1-Nintendo to launch new DSi handheld in Japan-Nikkei

Mon Oct 26, 2009 10:02pm EDT

* New DSi to have 4-in screen, on par with Sony PSP -Nikkei

* Bigger screen by itself not enough to fuel demand -analyst

* Nintendo shares little changed in weak market (Adds analyst and company comments, share price)

TOKYO, Oct 27 (Reuters) - Nintendo Co 7974.OS plans to launch a new version of its DSi hand-held videogame player with a larger screen in Japan as early as this year to kick-start sluggish demand, the Nikkei business daily said on Tuesday.

Nintendo, which cut the price of its popular Wii videogame console last month, has been looking to bolster demand for the DSi, whose monthly sales have slowed to a third of their peak levels following its launch about a year ago.

Nintendo's hand-held, which now has a 3.25-inch screen, is struggling against competition from Apple Inc's (AAPL.O) iPhone, whose screen is about the same size.

The new version will have a screen larger than 4 inches, which would put it roughly on a par with the screen on Sony Corp's (6758.T) PlayStation portable game player, the Nikkei said.

"A bigger screen alone does not count for much," said KBC Securities analyst Hiroshi Kamide, adding that Nintendo needs better graphics quality and a more powerful chip to run multimedia-type games and become more competitive.

"Nintendo is under pressure from iPhone and iTouch."

The DSi now uses a chip by ARM Holdings (ARM.L).

The large-screen DSi will sell for 18,900 yen, about the same as the current version, the Nikkei said.

Nintendo spokeswoman Yuka Tanegashima declined to comment.

Nintendo also plans to launch a version of the DSi with more robust anti-piracy features for the Chinese and South Korean markets by the end of the current business year in March 2010, the Nikkei said.

Its shares ended the morning down 0.5 percent, outperforming Tokyo's electrical machinery index's .IELEC.T 1.7 percent decline. (Reporting by Mayumi Negishi and Nathan Layne; Editing by Michael Watson)

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