PS3 sold more in it's first year than the 360 did, you only have to look at the numbers on here to see that. Sales were slow in it's first few months globally because the platform didn't launch in Europe until the second half of March.
PS3 started out selling pretty well, then got a lot better because not only did Sony support it well with exclusives from the beginning, but they also had 3rd party support.
Sony lost their market share relative to what they had with PS2 because they were a year late to the party in most regions, well over a year late in Europe compared to Microsoft. Bluray was a big selling point for the console too.
Cost was too high for most, but despite that being the case it still sold incredibly well for the price it sold for.
Hardware performance was a big factor, as was the Playstation "coolness" brand factor that still remains too this day.
If Nintendo wants to compete on a similar level to Sony then they need to come out with a bigger variety of games that cater to the same audiences that PS4 does, that's basically everything a gamer within that market could want, be realistic games, hardcore experience, casual, inbetween and some more niche quirky titles, hell Sony even caters to the platform nostalgia audiences, now they're cool again supporting great indie games that will feed the future gaming audience.
As to why Nintendo can't get the market share back onto a Nintendo console platform.
With Wii U it's hardware performance is lacking, gamers want value too.
Nintendo missed out on the architecture shift to X86 and only went part of the way there with the level of resources they gave developers and they added an alien controller scheme that further took them away from what developers wanted in the way of a set of features.
Gamers needed to know that Nintendo had developed a new console, they confused the market or just flat out didn't spell it out that Nintendo had a new console and the games that could make people want to buy a Wii U, because they weren't available anywhere else besides on that platform took a bit too long to release.
Wii U can still sell a lot better, Nintendo needs to follow through on the promises of the games they've made, keep moving forward with those, maybe bundle a cheap HDD in the box, drop the price of the console to a reasonable level.
Wii U should basically be used by Nintendo to prep for Next Gen, show they can expand their repertoire of games, make more variety that perhaps targets the 3rd party audience of gamers, that will draw focus back from the developers of those games.
So long as Nintendo then goes to those developers to ask them what they want in the way of hardware for the 9th gen they could put themselves in a good position from the beginning. Maybe a new name for the company, or just drop the Nintendo branding into the background and focus on the name of console.
For Wii U now it has to be about creating a great library, on a console that is a great value package, that does games that are exclusive to that platform, that can interest gamers who own a PS4 or XB1, while having other games that maybe broaden gamers horizons.
Maybe Nintendo should create some new studios from Indie devs, made in the west and build those into AAA studios for the future, because talented game creators are most definitely the future of the industry.
I don't personally think the physical console is going anywhere, anytime soon. Cloud isn't taking over any time soon and if mobile phone or tablet/netbook processors get more powerful you can fit even more tech in a console case.
