There are two things I think that cut into Nintendo's sales. That's third party shovelware and Kinect. I worked at Gamestop for a short while I can definitely tell you that when it comes to the "party" games, a quality title like Wii Party will get shafted so often by parents and kids for the next and numerous variations of "Family Game Night 2!" The parents love the cheap prices of these numerous Nintendo rip offs and the young kids seem to not know the difference unless they are die hard Nintendo fans.
And my feeling with Kinect is that it only stole a small portion of the wii pie, but it got more in image than it did sales. Everything from the new purple and green color scheme to the commercials with kids with their mother and father playing with the Kinect. The emerging "Kinect Series" games are very similar, and intentionally, to the "Wii Series" games, in their simple and clean appearance.
From what I saw, people were receptive to this overhaul of the xbox image. They just don't have any killer apps yet for the "New" xbox image. So until that happens (Sports Resort, Mario kart, etc...), I think it will stay a small piece of the pie gone, but with potential for a bigger slice to take away.
