If you look at 2008's sales to date, the Wii is hovering at a rate of (roughly) 22 Million units per year when you factor in typical sales trends; this is without a price reduction or any major "system selling" third party exclusive games. I do believe the Wii is fairly close to a peak, but I don't believe it is because of the systems lack of desireability ...
A well known statistic on this site is that in the last generation 75% of all console purchases were made when the system was $200 or less; today 51 Million consoles have been sold, representing approximately 30% of all consoles sold last generation, and not a single system is $200 or less yet. We're at a point where nearly everyone who wants a console and is willing to spend more than $200 to buy one will already own a console ...
Nintendo is in a (very) good position with the Wii because their manufacturing costs are low enough that they can reduce the cost of the console and increase the value of the package at the same time; hypothetically speaking, Nintendo should be able to sell the Wii, with 2 Wiimotes, 2 Nunchucks, Wii Sports and another game for $200 without losing money. Regardless of their approach, Nintendo should be able to (at least) maintain demand for quite some time ...
