A combination of wishful thinking, denial, and a desire to rewrite history in order to protect the system they hold dear.
I'm a Nintendo fan and I can say with all honesty that Nintendo 64 & Gamecube did NOT do what they were supposed to on the market—good systems or no. Because they made money they weren't business failures (which is most important) but marketwise they bombed in comparison to the competition.
And you must maintain a market to be able to be good on the business end because with each contest loss your sales base slowly declines. N64 sold more than the Gamecube. If Wii didn't do what it was supposed to do sure Nintendo may have made money but they would be in more and more dire straits with each coming generation due to dwindling market representation. They would only end up maintaining and not building upon. Eventually it wouldn't be worth it to continue in the business to maintain such small marketbases. Gamemaking is an expensive business unlike piemaking. You can get a stove, a few pie tins, pie ingredients and set up shop on a common table in your front yard to sell pies. Advertising is some cheap cardboard sign with a magic marker that you post on a road sign. The "R&D" doesn't require that much and the overhead can be made nonexistent. Not so in a high-tech fickle field like videogaming where profitmaking is extremely difficult (ask Microsoft and every other company who's tried to make it in this field).
Hiroshi Yamauchi said DS was Nintendo's last chance to get back to their rightful place. He said if it fails they may profit but it will sink them to hell, if it succeeds it will raise them to heaven. They are now in 7th (gen) heaven.
I love Nintendo as a company but the greatest selling consoles of all time were the Playstation 1 and the Playstation 2. There's no way I can rewrite history based on who I side with or support.
Rude awakenings and bubble bursts are gonna bring these types of folks back to reality soon enough. They'll learn in time.