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Nintendo still has to adapt to changing conditions in the market. Many of those conditions are price sensitive. There is no such thing as a magical product that retains its full value from the beginning of full production to the end when mass produced and readily available.

While I personally don't see a $50 price drop resulting in an instant evaporation of the stock piles of consoles Nintendo has been building up this year (assuming they have not been cutting production), you're implying that the Wii will what, remain at $249 until it goes out of production in another ten years?

History shows that hit software causes temporary spikes in sales that diminish at a steady rate. They are not permanent by any means, regardless of "legs."

Hardware price drops by contrast, result in a plateau stepping effect as the lower price opens up newer price sensitive markets. There are simply larger markets for lower priced consoles. The raised plateau remains fairly consistent as demand at new prices continues to be met.

You are correct in the respect that price drops do need to be accompanied by solid new titles or run the risk of being perceived as a platform on the decline.