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I think they would be a pretty comfortable no.2 this gen with 40-50 million consoles sold if they had done this:

800 GFLOP console + Wiimote + Pro Controller shell (cheap) = $249.99 today ($299.99 launch) and been willing to work with more Western 2nd party partners. 

MS is not looking strong this gen at all, Nintendo missed their oppurtunity to take advantage.