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If the Wii cannot recover, I think it's a death knell for home consoles in Japan in general. They are done there, the PS3 isn't going to save the console market there. Sorry. 

The DS2 and PSP2 will be powerful enough 3D machines to handle most of the big Japanese franchises and devs will switch over entirely. 

Whether you like the Wii or not ... it is the last best hope for the Japanese console industry.