Why would Nintendo be concerned about keeping up? They are the market leader in portables and home consoles, and they continue to be so week in, week out. They have continued as market leader in the home console space despite declining Wii sales, a continual stream of big games on the HD systems, a lack of significant 3rd party support on Wii, extremely hostile media (at times), price cuts and even a console redesign from Sony.
It's Sony and Microsoft who are trying to keep up. Why else would Natal and Move be being hyped as the next big thing? If they didn't need to keep up with Nintendo or to slow down Nintendo, we wouldn't be seeing these add-ons. Don't let the majority of the gaming media fool you into thinking it's Nintendo who are being forced to find a way to keep up. It's Sony and Microsoft attempting to take a piece of Nintendo's pie so that they're in a stronger position next generation. It's Sony and Microsoft who apparently have more to show for their home consoles this E3 because they have more work to do.
Nintendo's biggest concern right now will be Apple and the potential of the App Store to disrupt the portable market. 3DS will be given a lot of publicity this E3. We'll see what Nintendo has planned next for Wii, and I expect it to be a strong and varied line up of software (Zelda, Metroid, Xenoblade, potentially Pikmin 3, Last Story, Wii Party, Wii Relax, Retro Studios/Project Sora's games) and their next userbase expanding peripheral-vitality sensor. In the face of Sony and Microsoft's hardware add-ons, Nintendo will do what they always do-march to the beat of their own drum.
