Price is not the problem, Nintendo president Satoru Iwata said to the British gaming website CVG earlier this month in regards to the company's struggling Wii U console. The $300 "Basic" unit, he said, is being outsold by the $350 "Premium" configuration. Therefore, the price of Wii U is not what's keeping sales so low (a measly 160,000 units worldwide in the last quarter), Iwata reasoned.

And yet, Nintendo's actions don't exactly square with this line of thinking. Today, it said that it would introduce a new model of the Nintendo 3DS, called Nintendo 2DS. The new version, arriving October 12, is characterized mostly by feature cuts: It has no 3-D screen, although it will play all Nintendo 3DS and DS games with its 2-D display. It has a single molded body, not a clamshell design. It has monaural sound.

The benefit of all those tradeoffs is that the price of 2DS is $130, or $40 less than the price of the lowest-end Nintendo 3DS model today.

Well, you might say, that's the 3DS, and Iwata was speaking about Wii U. But wait, there's more: Nintendo also said today that it will lower the price of the Premium Wii U set, which includes the NintendoLand software as well as a few other additional packed-in items, from $350 to $300.

But why do that, if price isn't the problem? Because price is always the problem. It's the single biggest factor keeping your product from getting into the hands of more people. And this isn't just Nintendo's issue: The Wall Street Journal reported two days ago that orders for long-lasting durable goods (game consoles, e.g.) had dropped 7.3 percent last month, nearly twice what economists expected. "Businesses and consumers typically make big-ticket purchases when they are confident about the economy," the report noted. Rumors strongly indicate that Apple is weeks away from announcing a cheaper, plastic-shelled iPhone 5C.

Nintendo of America president Reggie Fils-Aime told Kotaku that 2DS is "an entry-level handheld gaming system." Truer words were never spoken, but the fact that Fils-Aime had to say them at all illustrates what went wrong with 3DS. Up until the launch of the glasses-free 3-D portable game machine in 2011 at an exorbitant $250, all of Nintendo's handheld game devices had been entry-level machines from the moment they launched. Nintendo had always been fastidious in its efforts to constantly use low-priced hardware, even when that earned it scorn from that segment of players who wanted a color screen on the Game Boy or an analog joystick on the Nintendo DS.

When 3DS stumbled out of the gate, Nintendo responded by swiftly slashing its price from $250 to $170 – exactly where it sits today. I have no special knowledge of the cost of goods of the 3DS and the 2DS, but I would not be surprised if the custom 3-D screen means that Nintendo is not making a whole lot of money on 3DS, and that the redesign of the 2DS not only lets Nintendo sell it at a significantly lower price but at a significantly higher margin as well. I can see 2DS getting under the magical $99.99 price barrier by next Christmas.

2DS is also, of course, the death of glasses-free 3-D as a fundamental feature of the 3DS platform. Now it's more of an extra bonus for buying the more expensive versions. But it's easy to imagine that if Nintendo had a time machine it would go back and take the 3-D display out of the thing to begin with. Mostly it seems to have increased the cost of 3DS with little benefit.

If current 3DS owners look at the 2DS and think "Wow, that thing is dumb and I don't want it," I don't think Nintendo much cares about that. The point is getting a different group of people into the DS ecosystem. Nintendo could drop the 3DS price by a few dollars, but it's a much better idea to redesign the whole thing and ditch the elements that keep the price high and the margin low.

Will the Wii U's GamePad controller, with its costly extra screen, prove in the end to have been a similar albatross? Will Nintendo have to introduce a similar Pad-less version of Wii U in order to drive down the price even further? For now, it's taking the price down by a small amount and playing with new configurations. On September 20, it will drop a Wii U bundle themed around the upcoming game Legend of Zelda: The Wind Waker HD. The $300 package swaps out the included NintendoLand disc for a downloadable version of the new Zelda game and adds a golden filigree design to the GamePad.

Satoru Iwata is surely telling the truth that the Basic version of Wii U is selling far fewer units than the Premium model. I pointed this out (based on anecdotal evidence) in June when I predicted that Nintendo would make exactly this move – reduce the cost of the Premium pack and take the Basic off shelves. The flaw in his logic is this: The price differential between the Basic and the Premium packages does not matter to those who have already decided to buy a Wii U. By the time they decide to get the hardware, they realize that spending an extra $50 for a game, more storage and more accessories makes economic sense. To get more people interested in buying a Wii U in general, the price had to come down.

Reworking 3DS in a radical way to get the price down is a smart move. Getting the desirable Wii U model under $300 is a smart move as well. But I think only the 2DS will prove to be enough of a reduction, and if home console sales stay soft, Wii U may have its own 2DS moment as well.