Presumably [Atlantis] established a baseline for the GBA [Game Boy Advance]; Nintendo president Satoru Iwata mentioned in his keynote today that the company's game design guru, Shigeru Miyamoto, has a tendency to recycle good elements of failed projects years down the road, and that philosophy likely extends to hardware as well. (In fact, Kuwahara showed off a GBA touchscreen peripheral he had worked on that never saw the light of day but almost certainly mutated into the DS.) But the 1996 target date for Project Atlantis and the GBA's 2001 release is quite a gap. Why the delay?
My guess is: Pokémon. Game Freak's socially-driven cockfighting RPG was an unexpected end-of-life hit for the Game Boy, and its out-of-left-field success added years to the fading system's life. The popularity of Pokémon might actually have been the first time Nintendo realized that technology and profitability don't go hand-in-hand. This happy windfall let them subsist for a few more years on the far more lucrative Game Boy Color, whose components were downright ancient by the time it launched -- making for a machine that was very, very inexpensive to manufacture, and thus a much-needed way to soak up money while N64 sales fell behind PlayStation and third parties began to drift away.
That in turn gave Nintendo time to perfect their 32-bit handheld . . .
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