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LurkerJ said:

So.. you narrowed it down to two outcomes. Wii U or a console with beefy specs that's sold at a loss.

Why couldn't Nintendo put out Wii 2? That scenario wouldn't have supported your claims though, would it?

Wii U specs, Wii motes and no gamepad for 250 dollars wouldn't be sold at loss. 

That is the solution I wish they had done. But that is not the angle Nintendo had planned on going. They wanted to attract the more core userbase and thus the only other option they would have tried was a more beefier system.