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Here's the most important thing:

Last gen, Sony had 75% and was profitable.

This gen, Sony expected to walk away with the race again, and they contructed a console that needed to win in order to be profitable, and as a result when they failed, they failed hard, and lost most or all of their PS2 profits quickly.

Last gen, Nintendo built a console that was profitable despite a dismal 12% market share.

This gen, they followed the same plan, and now that they are teetering on a 50% share, are making an embarassing amount of money.

It's clear to me which business model is the better one.