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RolStoppable said:

Yeah, you should find an answer for why the GC sales sucked instead of parroting the nonsense you have heard. Simply put, the GC failed because it was the Nintendo version of the PlayStation (talking about the brand, not the PS1). A lame copycat, so people went for the real deal. Out of all the Nintendo consoles, the GC had the best multiplatform support, but at the same time it's the worst selling one. Looks like gettting third party support and being successful as a console manufacturer at the same time is at odds for Nintendo. Making a port machine like the GC didn't improve their fortunes. If the $200 version of the PlayStation failed to sell, then why should the $400 version of it succeed?

Why is there the belief that what works for Sony and Microsoft will work for Nintendo as well? After all, nobody believes that what works for Nintendo will work for Sony and Microsoft as well.

As I mentioned, you route would be profitable for Nintendo. I still think it would be diminishing returns as each iteration sells less than before though.