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So the question is : "what can prevent the Wii from winning (selling the most consoles) this generation ?".
People here keep citing problems from Nintendo. Well, I think this is nonsense : no problem from Nintendo can ever make the Wii fail.
For example, online games are not even there yet in most of the world for the Wii. And Nintendo didn't even release most of their hardcore games yet.
So no, Nintendo won't be the cause for the Wii not winning.

The reason for the Wii not winning will be completely outside Nintendo power.
I see several things :
- 3rd parties continue making crappy games for the Wii. Wii owners are not that stupid, there's no way we will buy so many crappy games. They'd better get their act together, instead of saying "we don't sell on Nintendo consoles". They don't sell crap on Nintendo console, because Nintendo has lots of games setting the standard in many genres, and they'd better come up with sth close in quality. People see Nintendo games, and won't go for much poorer ones after that.
- Manufactor. Somehow, the Wii must be produced at a far higher pace to sustain the holidays. 1.2M/month won't be enough. Of course, they have to prevent warehousing, so they will look at what happens with 1.2M/month during the slow summer period. But if they sell out during summer (would be even more amazing), 1.5M/month in August won't be enough. If they sell 600k/month in summer period, 1.5M/month in August will be enough.
- XB360 gets all PS3 3rd parties, including FFXIII : this would put so much support behind XB360, that it would skyrocket its sales. Well, It would need 1 year at least to port though, IMHO. Success of PS3 in Europe can prevent that from happening.
- XB360 gets all the japanese games support for western area. Same as above. The success in Europe will hopefully prevents that from happening. Which is why a success of PS3 in Europe is good for both PS3 and the Wii.

Some things I think are wrong :
- HD won't change a thing. That's a hardcore dream. Most people don't care about all these numbers, they just want a big screen that is future proof, and not too expensive. If they cared about all these numbers and all the quality, they would not buy all these LCD sets, which are the worse quality wise, which is a well known fact of LCD makers, who hope price and time will help them make them sell and make it even with the best technologies (which is just what happens) eventually. Those that buy the smaller sets (< 40") is just because they are lighter and thinner, and they see it as more value than the cheaper SD sets. Most importantly, the people that buy these sets for games are a tiny niche. And just like they won't stop watching SD contents on them, they won't stop playing SD games either.
- Even if the Wii is a fad, if Nintendo can sell Brain Age/Academy till now on DS, they will sell them on Wii too for at least 2 years. DS introduced these franchises to casuals already, so this is millions of casual buyers potential. An online version would be a killer. The channels are very good too.