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It's easy for Nintendo to make a more powerful console if they wanted to. The N64 was more powerful than the Playstation or Saturn and technology is far more advanced, plus MS shot themselves in the foot by going with a weaker hardware because they were over concerned with RROD issues.

Tactically MS doesn't hold any sway worldwide. It's just the US where they are doing well, and even here they are not going to beat Sony.

Halo is still a good franchise, but it's not what it used to be. Kids today don't care about it in the same way.

IF (and that's an if), Nintendo plays their cards right, IMO MS is vulnerable and could be pushed to a no.3 position worldwide and who knows if MS feels fit to continue after that. They don't need the game business, the profits are peanuts to them and the only real reason they came into the business because they were worried about game consoles threatening the Windows monopoly (shoulda been watching Apple and Google, MS, not Sony).