I hear a lot of people saying Nintendo can't afford to compete with a traditional console...

[pokoko]

RubberWhistleHistle said:

nintendo is actually a larger company than Sony, and both are insignificant specks compared to microsoft. i dont know why people have a hard time understanding this.

Nintendo is much smaller than Sony.  It's really not even close when comparing assets.  Nintendo has simply been much more profitable, which is entirely different.  

On topic, Nintendo can and always could compete, they just chose not to do so, believing the power of their own brand was strong enough to win through.