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Squilliam said:

The important point Pachter is making is that the Wii is unable to address the entirety of the market. Thats the significant point right there which has prevented the Wii from aquiring > 50% of the market. So whilst it was able to serve many of the underserved/unserved non consumers of the market it failed to address the needs of the entirety of the market and at that it failed to serve the majority of the existing gaming market either if you consider the fact that a proportion of the current Wii userbase is new to gaming.

 

True, as has been mentioned above they're likely to target this portion of the market next gen. At least I believe so.

There're not much choice though, either you move up or down on consumer pyramid (or fight against non-consumers). Some known essential characteristics of Nintendo business model will pervent them from moving really down (especially competing with such extremes as free or very, very cheap games like found in AppStore), so their expansion is to move upmarket.