1) They don't need to, if we're to follow Christensen research you seems to be referring to, sustaining innvoation is yet to be implemented by disruptor. Since this industry operates in generations, i.e. technical upgrade every 5-6 years, Nintendo is in win-win situation next gen merely by introducing hardware, which qualities valuable by high-end market (=basically hardware performance) are significant step forward from previous itteration, i.e. closer to high-end market demand. Nintendo is yet to move upmarket, in fact they've got no choice but to move upmarket. Nintendo have upper hand in that case, while both MS and Sony in serious danger of loosing marketshare, unless they'll differentiate significantly from Super Wii (my personal bet, MS might figure out the way, Sony - not so much).

2) How so?

1) Sustaining innovation is a thing both Sony and MS can do too, so it makes sense for them to fill the conceptual gap now, even with no hope to do something big this gen, to start next gen in a better position.

2) By the definition of incumbent itself.

1) They can, the thing is, they are already way over the high-end market demand with hardware qualities they have to offer, while Nintendo is still below. So they may upgrade and again significantly outpace Nintendo, but it will give them even less results they're getting now. For reference read: Disruptive Technologies: Catching the Wave //HBR, Jan-Feb 1995, p.46 (it's about HDDs manufacturers throughout 70-80s, look at the chart - we're still in the very beginning of described process).

2) How they can be incumbent while there're no disruptors besides Nintendo?

1) Nintendo must compete with itself, it's its biggest challenge, making something that's as good or better, for its future times, than Wii is this gen.

2) The existence of a disruptor has never been a prerequisite for the incumbent's existence. Nor another disruptor is necessary for the previous disruptor to become incumbent, it could prevent it, instead, as the previous disruptor wouldn't lower its guard nor relax on its habits. Potential disruption from Apple probably made Nintendo act ahead of time and try to disrupt again the portable market with 3DS early launch, as PSP is a decent competitor, but not a threat for DS by any means.

Edit: aboud HDDs, it's a different situation, in the 70s and 80s they were awfully expensive and really ready for disruption, and their market wasn't comparable at all to current console market, HD consoles still retain some appeal for a good share of users, old tech HDDs had nothing that could save them. In more recent times, HDD market was plagued and heavily influenced by awful reliability downfalls in some of the fastly changing market leaders, and unreliability is a flaw no HDD user can forgive.

It is funny to see  Nintendo having success  fighting with its gorilla warfare. hehe

but I thought XBox and PS3 was selling at lost.  how much money do they need to make to recover that? Could Nintendo not use that to there advantage? Are they not comited? There must be a window sometime that could bring maximum damage from a Super Wii Subsidized consule?

Or thats the hole pointe. Nintendo can sell its consule with exclusives to the Coregamer and go after casual yet again. As long as it works they will continue.

Though a Consule you can build up to as powerfull as you want or need could be intresting if launched with all the parts the first day of open sells. and not have to be sold at lost. Over a periode of its life span owners could buy the basic package and when it wants, buy the 1 or 2 parts that makes it play all them super triple A Gunfest Ps3 and Xbox seem to be getting for its core gamers. 

something like a components Wii you can build up to unleach the true powers of the Voltron!!! Hehe soundws a bit silly

but Just launching with a Super Next Gen Wii and a Normal next gen Wii could do the trick. 

Have 2 lines of consule.a cheep one to disrupt that no gamer can ignore and will eventualy buy cause of a few exclusives and one to have and to hold (super graphics Wii that plays all Exclusive and all that yummie Core gamer loving)   And then one to control over them all mhaahahaha!

heheh =)

No but in all seriousness people might say Well im going to have to buy a next gen Wii anyways at some pointe so why dont i just get the MegaWii and then i dont have to buy a PS4 or a Xbox720

But on top of all that  You still disrupt with your Normal wii to gain a foothold into your competitions households

Cheers

1) It has nothing to do with the subject under discussion, sorry.

2) You simply wrong. There's incumbent for every disruptor, disruptor for every incumbent (or group of them).

They could make a system  to try  be the incubent and keep the Wii as its disruptor

Pachter, just because something seems logical to you does not mean it is logical.  Nintendo is a business and they seem to know what they are doing--what are you, besides an over glorified analyst--if I can even call you that since you only seem to know how to analyze with emotion rather than facts.  The Wii is still outselling the PS2 at this point in its lifecycle--there is no need to bring out another console because Nintendo can still explore other alternatives to compete with Move and Natal.  Besides, Nintendo does not need to bring out a half@ssed machine just to compete with something that for now the Wii can probably handle.  Nintendo needs to get its next gen machine right because they will not have it this easy next go around.

1) Yes, it's the main challenge implied in Nintendo's goal of sustained innovation.

2) Sorry, it's you that are partially wrong. While it's true that a disruptor must have an incumbent, not necessarily the incumbent always has to face a disruptor, disruption happens more or less often, but there are also periods when there aren't disruptors. Incumbents exist when at least one of the players can achieve a market share strong enough and after doing it it relaxes on conservative habits. The incumbent Christensen describes is not the only possible one, it's the particular incumbent that has those peculiarities and typical behaviours when the incumbent vs disruptor game is on or is going to start. It's also true that market leaders becoming incumbent are indeed preparing the market to be disrupted, but there's not a strict rule that says how long the incumbent can enjoy its power before disruption rises and hits (otherwise disruption could be pre-empted).

Backward-self-disruption? Do you want Malstrom's brain to melt?