I think that Nintendo's sales losses can all be put down to consumer trend. The PS1 had a two-year head start on the N64, used a much more efficient storage method in the emerging CD, which drained the vast majority of N64's third-party support when they realized the games would not fit on a cartridge. The lack of games, along with a rather intimidating (but still awesome) controller probably scared a few people away.
PS2 on the other hand was the successor to an incredibly successful system, was a DVD player when the market for them was just hitting the mainstream and had huge third-party support. The fact that it was a DVD player alone probably drew in 50m+ of it's sales from people who thought "Hmm, I want a DVD Player, what? That thing not only plays Playstation games, but is also a DVD Player? INSTABUY." That's the reason I and many of my friends got PS2s and I'd imagine it was the same for many others.
I'd also be agreeing with a couple of people earlier in the thread, the N64 and the GCN did have arguably Nintendo's greatest games, but there was one glaring hole in their libraries: 2D Mario. Had 2D Mario been released in late 2003- early2004 with a whole "Return to your roots." sales pitch, I guarantee that they would have sold a few more million consoles and pushed Xbox into last place. Wii U already has a practically confirmed 2D Mario, so it is very unlikely it will come third.
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