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How can selling almost 100m consoles and whipping the competition be considered as "lacking in foresight"?

I know you are making a point about more than sales but as money talks I would almost make it the no. 1 pointer to success.

You do however ask a good question with the wii U around the corner and talk of it's graphical power - or lack off.

I can only answer your question with two questions.

1) I believe if Nintendo had gone with the HD option with the wii-remote it would have been still successful but would it have sold as many consoles being more expensive?

I think it would have still won.

2) Would a more power console have brought more third-party devs onboard?

I don't know but I like to think yes.

Remember nintendo tried something new (moving away from graphical power to promote innovation) with the controller and was taking a risk. Better to take a less expensive risk by keeping the console cheap.

In a nutshell:
Nintendo made a lot of money with wii sales and in-house software with a cheap low powered system.
Nintendo missed out on a lot of money lacking good third-party support because of a cheap low powered system.
Could they have had the best of both world's with decent hardware? I like to think yes.

So maybe they were lacking on foresight but it would be harsh to hold it against them considering what they acccomplished with a cheap low powered system.