I'm amazed at how slow people are on the uptake.

Yes this is the case. The current generation with their technology based reviews pushed the market into a corner. To be able to get good review scores and good sales, you need a big investment and its a big risk that needs millions of sold units to turn a profit.
Now, on one hand you have a market of about 140 million people with the PS3+360, and you have a next gen market upcoming that wont have more than 8 million at best until the end of the year (this includes both platforms). Its an optimistic prediction has these systems will launch at about 400 euros price or more. Most wont be willing to upgrade at that pricce, so it will only sell to the early adopters, just like what is happening with the Wii U.

Now think... if you are a developer/publisher the answer as to wich platforms you MUST have your game on its quite clear. You can then choose to port/support to the next gen systems to try and stimulate the market growth of those consoles, but if its anything like the Wii U, and i think it will be, current gen is still gonna stick around for 2 more years, until those userbases can grow enough that its profitable to release your games on them and safely make a profit. Its gonna be mostly first party games on these first 2 years, and those will decide who probably wins the following gen.