Nintendo expects slower game sales going forward, but the game company’s chief doesn’t want folks to think it’s due to piracy.

Speaking at an investor conference late last month, Nintendo President Satoru Iwata said he doesn’t believe that “slower sales are solely due to piracy.” Although he acknowledged that piracy plays some part, the real issue going forward for Nintendo, which said in its latest financial filing that it expects slower software sales through the end of its fiscal year, is that it doesn’t have “hit” titles to carry it through.

“With the lack of such hit software titles, we had to come up with the unit shipment forecasts with the assumption of a slower sales pace than when we originally made this year’s financial forecasts,” Iwata told investors. He went on to say that Nintendo “has not been able to produce the titles which can be a great hit in the market.”

But that doesn’t mean that Nintendo isn’t taking piracy seriously. Iwata said that as a console maker, his company has a “responsibility” to confront piracy. He said that Nintendo is currently working on improving piracy “countermeasures” in its upcoming 3DS gaming handheld, which allows gamers to play titles in 3D without glasses.

Iwata has every reason to fight piracy. Late last year, TorrentFreak tallied the most pirated games on the Nintendo Wii. It found that the New Super Mario Bros. was illegally downloaded 1.15 million times. Punch-Out and Wii Sports Resort followed it in overall downloads. Across the industry, Call of Duty: Modern Warfare 2 took the top spot for most pirated games with a whopping 4.1 million illegal downloads.

However, Iwata knows that delivering desired games is what will inevitably drive software sales. And that’s why, going forward, his company’s goal is “to increase the number of our customers who are willing to shell out their money to purchase our products.”

With its Cell processor engine, Blu-Ray DVD drive and beefy hard drive, the PlayStation 3 is unquestionably a powerhouse of a video game system. And forget about Elmo, this is the item that consumers will be sparring over as the holidays get closer.

But cut through the hype, and the desire for the newest, flashiest gadget and the product is not as compelling as it might seem. The PS3, for all its power, feels incomplete at launch. And that could leave some consumers, who have shelled out $500 or $600 for the system, depending on the configuration they choose, feeling put out.

The potential for greatness is certainly there, but there are fundamental mistakes in execution that prove annoying. Take the initial user experience, for example: When you bought a PlayStation 2, it was a pretty simple process. You paid the store, took the PS2 home, plugged it in and started playing. Things aren’t so simple this time.

Once you’ve plugged in and configured your PS3, you’ll have to update the system software. Some (but not all) launch games will include that system update, which means the process will take 5 minutes or so. If not, you’ll download and install the upgrade from the internet (as I did). This method takes more than 10 minutes. It’s frustrating, especially having spent this much.

The money does buy something: The PS3 is the first system to fulfill the promise of being a true digital centerpiece of the living room. There’s little you can’t do with it. Watch high-definition movies. Listen to music. Surf the Internet. Chat with friends. And, naturally, play games.

Those system updates allow Sony (Charts) to add functionality down the road. The PSP portable gaming system Sony introduced last year has benefited greatly from system upgrades and there’s every reason to believe the PS3 will as well. (But they’re still a pain for day one users.)

The dashboard menu structure is similar to the PSP’s. Navigating between the areas that let you launch a game, movie or music, along with the Sony Network (the online service which allows you to download trailers and buy add-ons for games) is all pretty easy.

The only part that could cause confusion for some is the settings field. If nothing else, Sony is thorough in letting you choose how you want to set up your PS3 — but there’s such a thing as TOO thorough. Quick: do you want your audio CD output frequency to be 48 kHz or 44.1 kHz? You get the point.