SANTA MONICA, California (Reuters) — Sales of Nintendo’s quirky Wii video game machine could top the legendary PlayStation 2, making it the biggest hit in the industry’s history, Nintendo President Satoru Iwata said on Thursday.

Nintendo Co. Ltd. sped past Sony Corp. in market capitalization last month to become one of the 10 most valuable companies in Japan.

Iwata in an interview also played down the threat to Nintendo’s business of a price cut in Sony’s PlayStation 3 and the introduction of a thinner PlayStation Portable.

The Wii has outsold Microsoft Corp.’s Xbox 360 and Sony’s PlayStation 3 monthly since its November launch, helped by its relatively affordable $250 price tag and a motion-sensing controller that can be swung like a bat, for instance.

Instead of offering lifelike graphics to appeal to hard-core gamers, who are mostly men, Nintendo has appealed to an audience including women and the elderly with innovative but easy-to-play games.

“Sony’s PS2 sales of 100 million units is an extraordinary number that our home game console business has not achieved,” Iwata said.

“But if we can make our bid to expand the gaming population a continued success, we could exceed that,” he told Reuters.

Sony has shipped more than 120 million units of the PS2, helping the Tokyo-based electronics and entertainment conglomerate dominate the $30 billion global video game industry over the past decade.

Nintendo’s strategy to entice new players into the video game market has so far proved a smashing success: its DS portable and the Wii console are flying off store shelves.

Nintendo sold 5.8 million units of the Wii by March 2007, and aims to sell another 14 million during the current business year to March 2008.

In an effort to revive sales of its console and better compete with Nintendo, Sony on Monday cut the price of its PlayStation 3 by $100 in the United States. The company also unveiled a slimmer model of the PSP handheld this week.

Those steps, however, are unlikely to have substantial effects on Nintendo’s operations, Iwata said.

“I wouldn’t say there is no overlap between the group of customers Sony is targeting and the group of users that Nintendo is targeting. But that overlap is quite small,” said Iwata, who is in Santa Monica, California, for the E3 game industry show.

Iwata also said the hardware side of its Wii game console business has already turned profitable.

It is not uncommon for a game maker to sustain prolonged losses in its hardware business while making money from software sales