I disagree with the op. 3 well balanced systems with broad appeal to a maturing gamer audience can work. Even if the over all console market is less than 200 million 3 systems all with market share in the 30s or high 20% range is viable. Nintendo's problem is too much of the mature gamer market sees Nintendo consoles as being for kids and casuals. They don't see the exclusive mature game offerings as being compelling enough to justify buying, and the multiplat titles at least for this and last gen are all inferior looking because the systems have been hopelessly underpowered.
“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell
"When the power of love overcomes the love of power, the world will know peace."
Jimi Hendrix
