Japanese DS rumours are building

By Jim Reed
Newsbeat technology reporter

Nintendo will start selling a new version of its handheld DS console before Christmas, according to press reports in Japan.

The business newspaper Nikkei said over the weekend that the latest model would come with a camera, digital music player and improved wireless internet.

Nintendo is refusing to confirm the reports in the paper.

In a statement, it said: "We have made no such announcement and will not comment on rumour and speculation."

Nintendo is close to overtaking Sony as the largest maker of video game systems in the world after three years of strong growth.

Its flagship Wii console far outsells both Sony's PS3 and Microsoft's XBox 360 in both Japan and the UK.

iPhone competition

In the handheld market, the DS is also the leader with 81 million units shipped, according to research company VG Chartz.

But in Japan, Nintendo has started losing out to Sony's rival Playstation Portable (PSP).

Games magazine publisher Enterbrain reckons the PSP has now outsold the DS for five months in a row.

According to the Nikkei report, Nintendo is also planning to upgrade the DS to compete with more advanced mobile phones.

Although unlikely to come with full calling capabilities, it said the new machine will feature "advanced wireless communication functions".

It is expected to be priced below 20,000 yen (£106) close to the current 16,800 yen (£89) price for a standard DS.

It will initially be sold in Japan but the company is also "considering overseas sales," according to the newspaper.