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Hm, I think the name confusion is a issue, but how big of a problem is more difficult to actually say.

Wii - Wii U
Xbox 360 - Xbox One
3DS - New 3DS
DS - DSi
PSP - PSV

I think all of them sound confusing, at least for a bit. The last one, DS and DSi, I (myself) didn't actually know if it was a new DS or a completely new handheld from Nintendo. 3DS and New 3DS I am aware it is a new system, but at first I was not sure about it as well. Xbox 360 and Xbox One I was aware of all the time as I follow the gaming industry a lot, Microsoft makes no mistakes with their great marketing, and on top of that I even worked for MS at the time. I think most people know it is a new system, even if the name itself is confusing. Wii - Wii U was also no confusion for me as Nintendo is my primary console of choice. But I believe the name is confusing, and I would have found it confusing if I didn't follow the gaming industry so closely. And in my opinion the biggest reason for the confusion of the Wii U is Nintendo themselves, their marketing. They didn't explain good enough to the consumers that this is their new console, and their marketing was far from aggressive.

Now, would I believe the Wii U could have sold more if they named it Wii 2 or "newconsolename". Yes, and no. With poor marketing and no hype nothing will sell well. It could have sold better if either one (name or marketing) was better, but I am confident that the Wii U is just a system that would never had made a big splash, period. They might have sold more but would still have ended up last this generation. At least this is my though.