My suspicion is that Nintendos next generation console will encompass the entire market and aim to defeat both incumbant players and manouver to prevent anyone else, Apple for instance from gaining traction in the console space. The next generation will not be won on performance as there will be even greater diminishing returns for hardware to even show to untrained eyes a significant difference in graphical capabilities. My suspicion is that they will throw out the book as to what constitutes a console and throw open development for the console to anyone and anything that people will want to add to it.
By not selling their systems at a loss they are even more dangerous if they give people freedom to use their systems as they see fit. The likely next generation Wii will probably be as much a personal computer as console. Its easier to sell people a system and then sell them games than it is to sell them games to sell a system. Its the most obvious way to expand their market by making a console less proprietary and freeing up the imagination as to what tasks it can perform. This is the counterpoint to the tactic of selling proprietary systems for a loss with proprietary capabilities in a razor/blades model.
The next step to capturing the market is to sell systems to people who would think to use it for tasks other than gaming and then rope them into using the full capabilities of the system. If they can have a fully functional application store and multiple user defined channels then the concept of a console walks out the door and in walks an organic user defined experience. Nintendo doesn't have to care if you buy the Wii as an advanced door stop/toast maker. They can't be everything to everybody so by throwing open the opportunity for many others to cater to their userbase both they and their users win in the end.
Tease.
