Here is a graphical representation of disruption:
The pink arrows are the important part. Everything is upstreaming, because that is the natural thing for the industry. There is no such thing as staying in the downmarket. Every company tries to be more perfect, more developed.Nintendo is upstreaming with Wii Motion Plus and Wii Sports Resort. This is the only way to go, for them.
Sony and Microsoft are also upstreaming. They could try counterattacking Nintendo, but Nintendo would be cornered, and it would put every resource on defending from a counterattack.
I already mentioned gunpowder vs. swords and crossbows. Saying that Motion controllers are good for their own niche is like a 16th century soldier saying that muskets are good for their own niche (of less trained soldiers who gave up accuracy and swiftness for the simplicity of shooting a gun).
True, but guns, the new downmarket, and they will evolve, and become more mainstream, while swords and arrows are the old upmarket that is doomed to be used by higher and higher circles, until they disappear.
