I think one of the biggest mistakes Sony made leading up to this generation was to release the PSP ...
I think announcing the PSP and (planning on) releasing it 18 months before Nintendo was expected to replace the Gameboy Advance really caught Nintendo off guard. Nintendo knew that they could not let the release of the PSP go unanswered and (at the same time) knew that people would not let them just do a straight replacement of the Gameboy Advance; their solution to this was to experiment with a drastically new user-interface and claim that it was a third-leg of their strategy (leaving them open to do a straight replacement of the Gameboy if it failed).
The fact is that the DS didn't fail, was fairing pretty well against the more powerful and expensive PSP, and Nintendo was seeing some very promising things from internal developers which led them to hint at a similar approach for their home console at E3 2005; after that the meteoric rise of the DS lead to the Wii being what it is today ...
In other words, I'm pretty sure that Nintendo's disruptive strategy was far more of a reaction to the threat Sony posed in the Handheld market than an organic movement within Nintendo; had Sony not cornered Nintendo I don't think they would have released the Nintendo DS or Wii, and without the Wii on the market the PS3 probably would have faired better even though it was a higher priced peice of hardware.
