by Reuters

TOKYO (Reuters) - Nintendo Co Ltd will launch a DS machine that can take pictures and play music, hoping to cement its lead over Sony's PlayStation and encroach into the territory of Apple Inc's iPod and iPhone.

The new model will be launched in Japan on November 1. It is slimmer and has bigger displays than the current model, and will sell for 18,900 yen ($179), up from 16,800 yen for the current model but below the PSP's 19,800 yen.

The Kyoto-based company, locked in a three-way battle with Sony and Microsoft Corp in the global video game industry, plans to launch the new machine, the DSi, outside Japan in 2009.

Nintendo's strategy to broaden the gaming population by offering innovative but easy-to-play games has been a roaring success in recent years as the DS and Wii console have attracted women and the elderly on top of traditional gamers.

White-hot demand for the DS and Wii console, which features a motion-sensing controller that lets players direct on-screen plays by swinging it like a racket, helped the company raise its annual operating profit forecast in August by 23 percent to 650 billion yen ($6.2 billion).

"We are finding ourselves in an unprecedented stage where one of every six people (in Japan) has the DS," Nintendo President Satoru Iwata told a news conference on Thursday.

"We will strive not only to appeal to those households without the DS, but to promote a shift to 'one DS per person' from 'one DS per household'."

The new model will be 12 percent thinner than the current machine and come with 17 percent bigger LCD panels.

Nintendo sold 6.94 million units worldwide of the DS in April-June, far out-pacing 3.72 million units of Sony's PSP.

In Japan, however, the PSP outsold the DS by 20 percent in the six months to September, according to game magazine publisher Enterbrain, in a possible sign of slowing momentum for the Nintendo machine.

Mizuho Securities analyst Takeshi Koyama said it is too early to tell how much demand the new DS is likely to stir up because it is unclear at the moment what kind of unique game software and services Nintendo will offer for the new machine.

"There is nothing earth-shattering about it ... We can hold high hopes of it if software titles unique to the new model come out," Koyama said.

"But they did not offer something like that this time around."