I don't think there is anything wrong with catering to the largest demographic of potential gamers or any demographic of gamers, hardcore Sony players included.
The art side of casual games vs. hardcore games is a dead horse beaten 1000 times. We argue too much whether a game is hardcore or casual way too much. For me, a game is hardcore depending on how you play it along with the player skill development or lack thereof. In this sense, those who play Wii Fit or Wii Sports only or over 50% of their gaming time are hardcore gamers. Likewise, the 12 year old who plays every latest FPS shooter, while not consistently getting better from game to game no matter the time invested is a casual gamer.
The business side, which the OP rightfully brings up usually gets muddled into a done 1000 times tired ass debate of casual vs. hardcore with each commentator (including myself) having differing definitions of casual and hardcore.
As for Microsoft and Kinect, it will be a smashing success in comparison to the Move. If compared to the Wii from 2006-2008, which I think is patently unfair as Kinect is a gaming accessory and the Wii is a console, Kinect will fail to sell what the Wii did. Yet, if the Kinect averages more than 100k units per week, then by the Move comparison it is a success.
Kinect and Move prolonging the generation? God no they won't. The Wii has seen decreasing hardware sales since it's peak in 2008 and Nintendo sure as hell ain't going to give the time to Sony to makeup for the PS3's disastrous first years with this generation lasting to 2014. Nintendo will kickstart the console race at E3 2011 or one of amid the TGS in late 2011 with a new Nintendo console in 2012.
