The technology behind the Virtual Boy wasn't bad in itself. It was the way Nintendo executed it that made it fail. Nintendo made several mistakes that doomed the system even before its launch.
1. THE NAME VIRTUAL BOY
Having the word "Virtual" in its name created expectations that the system's technology never had the chance to live up to. A more suitable name would have included "3D" or "Hologram" instead of "Virtual".
2. IMPRACTICLE DESIGN
The design of the Virtual Boy, with its "legs", made it very impractible. Making it seem more like a prototype than a finished product. Nintendo should have spent an additional 3-6 months tweeking the design, trying to reduce size and weight so that you could have been able to wear the system on your head.
3. BAD GAMES
The Virtual Boy was released with too few games, and they didn't really show the performance of the system. The release of the system was rushed to steal attention from Sony PlayStation and Sega Saturn, and in retrospective that rush didn't reach its objectives at all. Nintendo could have waited an additional 6 months and released the system with far better and more deversed software.
I still believe the Virtual Boy could have been a commercial success with total life time sales of 8-12 million systems.
However, an even better solution would have been to scrap the system on the drawing board, and focused entirely on Nintendo 64 development. Back in 1994 and 1995 the Virtual Boy did draw resourses away from valuable Nintendo 64 software development.
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