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You can build a significantly weaker console than your competitors and compete if you're innovative (Wii).
You can't if you aren't (Wii U).

Doesn't matter which generation you put Wii U in; no one wants it anyway as is reflected by the sales.

And Wii U is not next gen in the sense of graphics, which is one of the few things debatable. If you're just talking about a successor...that isn't arguable...obviously...