I don't agree. Of course 360 and PS3 will continue to drop price and add features faster than Nintendo. This is to be expected as Nintendo is the market leader and has a low price point.
The 360 is of little concern to Nintendo because as point #2 said, the Wii shortage. Until Nintendo can meet demand in America or demand starts to fall in Europe, it doesn't have to bother with trying to compete. In Japan, demand is not as high and Nintendo is countering that pretty well (new controller, different colored Wiis, different colored controllers, Japan only games, Wii Router).
About hardcore gamers, I don't think Nintendo cares a great deal about any small section of gamers. Nintendo makes games for various groups of gamers and for all gamers. It has been this way for a long time. Because the Wii control system is so much better than the other consoles, Nintendo is making special games to take advantage of this (Wii Sports, Wii Play, Wii Fit, Wii Sports Resorts) that are enjoyed by every type of gamer and people who never even played games before this generation. Hardcore games are coming to Wii at a high level, anyway. Look at the VC. Even some of the Wiiware games. Some of the DS Demos are hardcore. Of course, plenty of the actual games. Wii has RPG, sports, fighting, racing, FSP, strategy, platform, puzzle, party, simulation, and just about every other type of game around.
About hardcore, the Wii can even be modded, unlike the PS3 for the really hardcore and tech people.
Oh, and of course, Wii plays GC games.
I say, much to do about nothing.
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