Comment: Nintendo's Revolution steps out of the next-gen battle

One of our first reactions upon emerging from Nintendo's conference in Hollywood just prior to E3 this year, where the Revolution console was unveiled for the first time, was that the company had effectively just conceded the next-generation battle to Sony and Microsoft. It was the most triumphant, optimistic concession we'd ever seen, but reading between the lines, it was a concession nonetheless. Nintendo had just told the world that it didn't want to play with the bigger boys any more. The specification battle, the endless bickering over media functionality and parallel processing and teraflops and supercomputing, were of no interest to the Kyoto-based company that had played such a vital role in defining what videogames mean in our culture. Nintendo wanted out.

Last week, our first really solid look at the hardware that developers are working on for Revolution proved that our assumption about the company's intentions was correct. Nintendo is building a system somewhere between two and three times as powerful as GameCube - no parallel processing, no troublesome cutting-edge chips with their inherent manufacturing problems, no next-generation storage devices, no high definition output. It's got a bit more memory, some internal Flash RAM storage, an attractive, slimline case and built in wireless networking. Back of the envelope calculations suggest that it could launch for as little as $150.

Is this next-generation gaming? Not the way that Microsoft and Sony see it, no. Where's the HD Era? The Zen of Gaming? The Blu-Ray? The Cell? The gigaflops, the teraflops? All of the watchwords which Xbox 360 and PlayStation 3 have made into core parts of their next-generation offering are missing from Nintendo's vocabulary. Fed up of the headlong rush towards huge, expensive, loss-leading systems that pack more punch than supercomputers did a few years ago, the firm that managed to make a fat plumber with dubious dress sense and a Ron Jeremy moustache into an icon for a generation of style-conscious children has stopped the car in the middle of the freeway, Falling Down-style, and gone off for a walk far off the beaten track.

Instead of dazzling graphics and massive processing power, Nintendo is offering innovation that's more in the realm of gadgets than pure computing. Their console is loaded with clever features, from the unobvious - the clever way that the company has built a slot-loading DVD drive that accepts both full-size DVDs and the micro-size discs from the GameCube - to the glaringly apparent - an amazing control mechanism that feels genuinely, radically different to any other method of controlling a videogame. For developers, the challenge is creative, not technical - how to get to grips with these unique features, not to work out how to multi-thread their game code or build assets for games on super-powered consoles using PCs which can't yet hope to match their performance.

All very laudable, but at the end of the day, Nintendo is still offering a system which will fall far behind its rivals in terms of raw power. There will be no direct ports to Revolution as there were to GameCube; there will be no talk of the system boasting the most technically accomplished games of the next-generation, as there was with the Cube and Resident Evil 4. Whatever about the debate that still rages about the relative merits of the Xbox 360 and PlayStation 3 hardware, there's no doubt which console will be in third place in terms of performance.

Is Nintendo mad? That depends on whether you consider it insane for a company to launch a product with low manufacturing costs, easy software development, high margins and strong brands and franchises backing it, at a price significantly lower than its rivals can compete with. If that's considered to be mad, then how do you describe the business of launching a vastly expensive, cutting-edge box, after the investment of billions of dollars in research and development and developer acquisitions, each hardware unit subsidised to the hilt in the hope of clawing back your investment on future software licences? In our insane industry, Nintendo may even be a pillar of sanity.

After all, the last time anyone called Nintendo insane was when the DS was unveiled. Now it's been outselling the PlayStation Portable every week for around nine months in Japan, and you can't buy one for love nor money in the UK, one of Sony's strongest global markets. The most expensive packages on eBay? Pink DS units with copies of Nintendogs. In hindsight, if you can make teenagers think a fat plumber is cool, getting girls to demand games consoles for Christmas probably isn't that tough, but nobody would have believed you if you'd told them this time last year that Nintendo consoles would be facing supply shortages because the female market was tearing them off the shelves faster than they could resupply, leaving the boys scrounging for the odd well-hidden silver unit on which to play the year's top online console game, Mario Kart.

Can Nintendo win the next-generation war without even taking part? Instinct says no. The hardcore will still gravitate to the powerful consoles, and the PlayStation brand - in no small part due to Sony's incredible work on expanding its appeal in recent years - is as strong as it's ever been. However, can Nintendo make billions of dollars, sell tens of millions of low-priced consoles, hundreds of millions of games, and reinvigorate the entire industry with an influx of new customers? They can, and they just might.