I think Nintendo knows what they are doing.

For a 4 years old console, like the Wii, it has performed beyond great

There probably aren't that many people left who like the type of games that get released on the Wii and don't own one yet. Demand for the Wii peaked in 2008. The Wii is in the late adopter stage of it's lifespan (or perhaps it's still considered late majority. To be considered a late adopter I think you have to be at least one standard deviation from the midpoint of the technology adoption curve. And laggards are two standard deviations from the midpoint I think). Either way, the Wii is past it's prime demand-wise. The Wii is like a world-class athlete who is still world-class (in 2010 it's still beating the PS3 by a 1.8 million margin. It's just not the slim sexy little sales beast it used to be) but has clearly lost a step in their game.

Actually, before PSP and DS launched, it was assumed by nearly all the industry that "it was only a matter of time" until Sony took over the handheld space like they did home consoles. Handsight's 20/20, but the truth is that going into last gen, DS and Wii were both by far the underdogs.

It's quite hilarious that a PSP victory was predicted considering that the PSP's target audience (core male gamers) has never been that interested in handhelds in North America. Sure the PSP was beating the DS for some time early on but that's because the GBA was stealing some sales from the DS (plenty of parents probably bought the GBA instead for their kids because it was cheap and the GameBoy brand was more recognizable then). Overall, Nintendo was still winning the war. Once the DS Lite was released and given the $130 price point, it really hit its stride. From most male gamers I know in their twenties, few of them have any interest in handheld gaming because most of them drive a car during their commutes and when they are home it's PS3/Xbox 360 time.  At home, few 15-34 year old male gamers would choose to play a handheld game before a PS3/360 game. There is a significant minority (usually gamers you find online in forums like this) of 15-34 year old male gamers that are keen on the DS and/or PSP library. But they are simply that, a minority.

So, now Nintendo are d0ming themselves, eh?

That's because, in addition to what you wrote, failures and success are a lot more complex than the one-dimensional notions many hold about what games sell on what system. MoH has a strong pedigree, even if the series has had a slide from grace this gen. Bayonetta is from a studio loved more by the vocal gaming community right now than general gamers. Thus neither it nor Madworld had the brand names to open large. Perhaps further games will sell better as gamers know the studio more, but it will be uphill until they get a strong franchise.

Pikmin 3

Why are people so sure that "Wii 2" (actually it would be Nintendo's sixth home console) is coming out in 2012? That is quite a distance away. I would guess that the date would be 2011, the technology for a more advanced system is already at the correct price - it is time that Nintendo comes out with a new console.

Besides, if Nintendo R&D took over 5 years to complete a new home console then..........

As far as Nintendo not giving a crap about the Wii, that's crazy talk. How do you think investors would feel if there was a huge hole in the home console revenue for the next two years?  Keep in mind, that the Wii will be selling until 2013/14, it is not going to stop the moment the new console is released; and Nintendo is not going to wait until the Wii hardware market is dried up completely before launching their next console.... It would be my hope, as a theoretical investor, that Nintendo would transition to the next console without leaving a hole; by the time the Wii sales are fairly dry, the new console will have a solid 35 million units out - enough that software can sell huge amounts.

The Gamecube era was a very low point for Nintendo. N64 hardware and software sales were gone fairly soon, as a result, Nintendo was living off of the handheld industry. Gamecube represents Nintendo at the very lowest - few exciting software titles, and an image as a kids-only system (despite having games like RE4, which were seen as almost charity). Gamecube would have loved to see Wii's current success at any point in its career.

Excellent post.

Nintendo uses different development resources for home console and handheld. They wouldn't put 100% of their resources into one and ignore the other.