Nintendo, Microsoft and Sony are substantially different companies with different strengths and weaknesses and Sony's influence on the home console market created an environment where the "conventional" system played towards Sony's strengths and played against Nintendo's weaknesses. Even with superior technology and some very impressive first party games the Gamecube struggled in the market because of these conditions.
What Nintendo has done with the DS, Wii, 3DS, and (probably) the Wii U is introduce asymmetry in the market where they're producing systems that primarily play towards their strengths. You can call it a "Blu-Ocean" strategy if you want but, at its core, it is really about Nintendo designing their own systems rather than letting Sony or Microsoft design their system indirectly.
With that said, it is my belief that all three console manufacturers could have been much more successful with modest changes to their strategy in the previous generation. Had Microsoft or Sony produced more modest systems that launched at (roughly) $300 while still producing a significant improvement in visuals they would have likely seen (nearly) double their sales had their competition kept the same strategy; and had Nintendo been able to produce a system that was able to render "HD console" graphics at 480p, or "Wii level" graphics at 720p, I think they could have seen stronger sales all else being equal.
