I somewhat agree, Nintendo is starting to divert back to the red ocean of horsepower and hardcore catered games. However, I believe this console has the potential to be sort of a modern SNES, as in, a red ocean console, but still highly successful and admired by many gamers of all kinds, and with a better library/stronger third party support.
While I don't think the console will be as successful as Wii, this no longer really matters to me as long as the library is strong. In other words, I would rather Nintendo have a 50 million selling console with phenomenal third and 1st party support, than the 100 million selling Wii with terrible third party support.
Look at it this way, if Nintendo slides TOO much, rest assured sooner or later they will have Gamecube like sales and once again they will be forced to adapt their strategy. Remember, the failures of the Gamecube is what caused Nintendo to pull their heads from their ass and eventually make the hugely successful Wii, by catering to the mass market and bringing the old school fundementals of gaming back. So such a thing could definitly happen again, if the market forces them to.
The market has this great way of humbling and knocking sense into companies when their own ego inflates too much for their own good. It happened to Sony towards the end of the PS3 lifecycle after their miserable start, and you can bet it will happen Nintendo again should they revert too heavilly back to the hardcore strategies of N64 and Gamecube.
