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Last gen the xbox outsold the gamecube, so gamers had lost interest in what Nintendo had to offer. But Nintendo saw the PS2's succes and realized it wasn't the ''core'' gamer that made the console what it was. They made a smart move because competing with Sony and Microsoft for the favor of the 'core' or 'hardcore' gamer would have surely let to another lost generation. It seems they realized what made the PS2 work sooner then Sony, perhaps they figured (arrogantly) that those people would simply upgrade from a PS2 to a PS3 eventually. Nintendo hasn't lost anything this generation, they gave up the core gamer just like the core gamer had given up on them.