The Wii Fit game is one of Nintendo’s biggest sellers with 697,000 sold in the U.S. in November. Courtesy of Nintendo

By Yi-Wyn Yen

Nintendo seems to have bucked the recession. The Japanese video game manufacturer has doubled November sales of the Wii in the U.S. from a year ago, according to NPD’s latest release on gaming sales.

The demand for the Wii remains strong since the game console’s debut two years ago. The company sold a record 2 million Wiis last month, higher than the previous 23 months. Nintendo (NTDOY) has significantly increased shipments of the red-hot Wii for this holiday season after dealing with a shortage last year. Last November Nintendo sold 981,000 Wiis.

Analysts were taken by surprise by how well the $249 console has performed in a flagging economy. “Two million? You sure? This is mind-boggling,” said Michael Pachter, a top industry analyst for Wedbush Morgan Securities. Pachter had predicted sales of 1.4 million Wiis. “At least Nintendo is meeting demand.”

That’s something the company didn’t manage to do last year, when it underestimated the craze for its consoles. Nintendo had to offer IOUs for the Wii last December and ran out of the DS, its handheld console, before Christmas. This time around, Nintendo increased its holiday inventory for the Wii by 50% and 10% for the DS for the shopping season. November sales for the touchscreen DS, which launched four years ago, tripled to 1.6 million from October ‘08 sales, according to NPD.

The NPD numbers also looked strong for the Xbox 360 (MSFT). A recent price reduction to $199 for its entry-level version, exclusive titles like Gears of War 2 and Fable 2, and a major software upgrade moved 836,000 Xbox consoles in November. Gears of War 2 was the top seller for games with 1.6 million copies sold.

Sony (SNE) is struggling to pick up steam with the PlayStation 3, which remains the priciest of the three console makers. Sony sold 378,000 units of the PS3. The company released Home, its sophisticated virtual reality world, on Thursday to attract more gamers to the PlayStation platform.

Reports that consumers are drastically cutting back on spending hasn’t stopped nearly 15 million people in the U.S. who have bought a DS or Wii this year. “The consumer is voting with their wallets and pocketbooks,” said Nintendo of America president Reggie Fils-Aime. “That the Wii and DS represent the best entertainment value in the marketplace explains why these strong sales are happening.”

Pachter says it’s because people are now choosing a Wii over a latte. “There’s a solid middle class that’s going to make substitutions to buy games. Now it’s buy a Wii and don’t eat out for a month, or don’t take that ski trip,” he said. “Or cut out Starbucks.”

By Yi-Wyn Yen

These days, getting a large handout from venture capitalists is rare. It’s even tougher when your startup needs a lot of cash to compete with Google.

Kosmix, however, has defied the odds. In late October, the plucky startup raised $20 million, led by Fortune’s parent company Time Warner (TWX), by assuring investors that Google is not the only way to search on the Web. Kosmix says it takes a new approach to searching by categorizing everything by broad topics for those times when you don’t know exactly what you’re looking for.

“This reflects the fact that Kosmix has a unique technology that’s working well,” said Jonathan Miller, the former chief executive of AOL who is on Kosmix’s board. “No question it’s a difficult period to raise significant amounts of money in a late-stage round.”

A powerhouse of investors are banking on a future where search will evolve beyond typing in specific keyword terms on Google. Former Motorola CEO Ed Zander, who launched the popular Razr mobile phone, recently joined as a private investor and advisor to the company. The Mountain View-based startup, which has raised a total of $55 million in three years, is also backed by Amazon (AMZN) cofounder Jeff Bezos and Legg Mason fund manager Bill Miller.

Miller recently made noise for reportedly raising money from private investors to buy Yahoo (YHOO). Miller, a one-time Yahoo board nominee, refused to talk about Yahoo. He discussed the need for companies like Kosmix to take search to a new level in a way that Google (GOOG) does not. As CEO at AOL, Miller had tried to acquire Kosmix, cofounded by veteran entrepreneurs Venky Harinarayan and Anand Rajaraman. “How do you create breadth and depth in content pages and make it a satisfying user experience is a big and hard problem,” Miller said. “Kosmix has firmly established the lead in how this is going to happen.”

Take the phrase Mount Everest as a topic. Without more search keywords, Google broadly targets what you may be looking for. Google’s first three links include an empty graphics box from Google Maps, a Wikipedia entry, and a well-regarded news site for mountain climbers. The same topic on Kosmix returns a rich summary from Web 2.0 sources. Kosmix includes a short paragraph from Wikipedia along with photos from Flickr, videos from YouTube and video search engine Truveo, forum posts from trekkers seeking climbing partners to Everest, and top mountaineers who’ve climbed Everest.

Rajaraman insists his startup is not another search engine trying to take on the search giant. Google’s competitors – from tiny startup Cuil to software maven Microsoft (MSFT) – are struggling to make a dent in Google’s growing dominance in search despite spending billions. The approach, Rajaraman says, is to deliver relevant results with blogs, videos, pictures and news on a single page.

“We consider ourselves an explore engine. When you don’t know what’s interesting or know enough about a topic, you come to us. We’ve built algorithms based on topics that lead to a very different end point,” he said. “Google’s algorithms are about finding the best Web pages out there. It’s really, really hard to mess with that.”

By Yi-Wyn Yen

Yahoo’s fate is becoming more convoluted every day. Just two days after the Times of London reported that talks between Microsoft and Yahoo were back on, the the Wall Street Journal says former AOL chief executive Jonathan Miller is trying to raise money from private equity and sovereign wealth investors to buy the struggling Internet company.

Shares of Yahoo (YHOO) spiked 11% to $12.50 in mid-day trading on the news that Miller wants to raise between $28 billion to $30 billion to buy the company at $20-$22 a share.

Calls to Miller’s office were not returned.

Some are skeptical that Miller will be able to succeed. Wrote Standard & Poor’s Internet analyst Scott Kessler in a note, “We think YHOO is attractively valued, but that Miller would have difficulty raising this amount of capital, given the state of the global economy, of capital markets, and of YHOO itself.”

Miller has close ties with Yahoo and activist investor Carl Icahn. Miller was nominated to Yahoo’s board last August as part of a settlement which gave Icahn three seats. However, Miller withdrew because former employer Time Warner (TWX) (which also owns Fortune) would not waive a non-compete clause. Miller, who runs venture firm Velocity Interactive Group, was a consultant to Microsoft (MSFT) and Yahoo during their negotiations earlier this year.

Last week Icahn doubled down on Yahoo by spending $67 million for another 6.8 million shares. The corporate raider’s move fueled speculation that a search deal with Microsoft was inevitable. Icahn has lost roughly $1 billion since buying 69 million Yahoo shares at $25 a pop.