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.
Although i see where you are coming for and respect your opinion I must completely disagree on this one point I've bolded. I think, if anything, this generaiton has shown the complete opposite things. Even on Ps3 and 360. Evegreen titles on the Wii and DS are not becuase of consumers that have already bought the game, but becase of new buyers buying the game with the system. Sure a certain percentage is the former, but most is the latter. This is a video game market, and people buying the system go in looking for that form of entertainment. They look for a certain title and buy it based off of that. Whether it was Nintendo with Wii Sports (which luckily came packed in), Mario Kart, or New Super Mario Bros or later on with MS and Sony with Halo, Call of Duty, and Uncharted. Big, quality titles move hardware. It's easier to sell the hardware if you have the software to make it worthwhile.
And I understand a lot of people thinking the opposite, as it seems to be the opposite for other markets but that just isn't the case right now with the video game market. This generation has shown the necessity of big games to influence buyers into picking up the system. That's essentially what evergreen titles are. And this was a failed philosophy, imo, that Sony and MS may have had at the beginning of the generation that the hardware itself would be worth the buy without any key software to move it. If you think about launch titles, Zelda: Twilight Princes was biggest of all of them between the 3 systems. Tie that in with Wii Sports out of the box and you can understand why the thing took off like it did. And although there hardware did sell the systems, later on it was the games for it that sold the system and they capitalized, marketing wise, on it thereof.
When we start getting into the 8th generation of consoles and handhelds, the most important things are going to be the software that gets people to start switching over. As you stated, hardware differences are going to mean less and less (except for Wii to whatever N6 has) so either it's going to be on innovative features or it's going to be on new/big games that show off these new features. This is how all 3 will continue to keep the market large and vibrant along with expanding to new users. Continuously making the industry more flexible in nature so that more and more people can join in. And of course by giving them what they want: a solid gaming experience that will keep them buying more software. Hardware features and functions will still be important, but I think what things have shown as of late is that people just want a game to play to enjoy themselves. We can have the deeper games and even have these newer games get into them, but the way to expand out to more is just give them a game they can just have fun with. Then they will grow into deeper experiences and more use of the hardware features.
So yes lots of things the big 3 have to think about going into the 8th generation, but with the announcement of the 3DS, I expect big things.