No, no. Malstrom said that it doesn't. Kinect is only harming the PS3, which is why the PS3 is down 40-45% and the Wii only 10-15... wait, I got something mixed up there.
There are several factors in the Wii decline, Kinect is only one of them. It did have some pretty solid titles launching before christmas and it had a big holiday season despite being down so a simple "lack of software" won't suffice as an explanation. It goes deeper than that.
I think these are the key factors in the recent decline; hardware, not only is it really starting to look outdated compared to everything else being released today, it continues to force developers into a narrow and difficult crevice of programming (narrow in the sheer power potential, difficult in having to have two different builds for cross platform development). Software; yes, there is a software problem. Namely that 3rd parties have all but adandoned the console a good while before the console lifecycle is through and in times where there is little to nothing enticing by way of 1st party efforts on the horizon. Lack of features; kind of ties in with hardware problems. The other consoles play movies, not only burnt on discs or through Blu-ray but also online services and stores. They also have huge online components in the middle of the golden age of internet as well as a lot more to offer in the way of connectivity and user interface (friend codes are cumbersome at best). This is a consequence of overlooking the importance of online features and possibilities. Implementation of tech; the 360 has brilliant online through Live and the PS3 has Blu-ray as a respective flagships along with the games while the Wii has motion controls. The problem is two-fold; the HD consoles also have motion controls, allbeit somewhat tacked on as afterthoughts and mimic behavior, its still there. And then there's this issue; how many Wii games make true and good use of Wii Motion Plus? Or the Wii-mote at all, really? They're not playing on the inherent strength that is (or, rater, could be) the Wii-mote.
Dedication/pride; I put this on it's own since I see it as the biggest factor in the decline. Nintendo have been winning hearts, profit charts and marketshare for a long time with their Wii and DS and have become decadent to the same point as Sony were at the start of this gen. Its like they don't even care any longer, no real efforts to aquire new talent through studio purchases (developers), lack of advertising in large parts of the world and a refusal to lower the price further. Yes, a great many of you claim that price is of little importance (some go so far as to claim that it is of no concern at all) but it truly is. With the price still hovering only slightly below launch price, the prices of accessories and peripherals (the highest prices by far of the three) and the fact that the 360 costs essentially the same, consumers are starting to see the lack of value for money in a very real way. Its not like Nintendo have lost money on hardware this generation, unlike Sony and MS and its not like developers and investors will like the incredible drop in hardware and software sales as a result of refusing to take measures. Developers today probably see Nintendo as a company that doesn't care about their own product and its not hard to see why 3rd parties have a strained relationship with them. Aside from simple history (3rd parties never liked working with Nintendo, since the 80's) there's also the fact that they launched a platform that was widely different in architecture and potential output and when things start to go downhill they seem either unwilling or unable to remedy it.
If things don't start happening very soon, Nintendo may find themselves in real trouble next gen if they leave this one selling the least by far and having little to nothing to show for in their battle to remain on top. The 3DS can't carry them alone and games and gaming are all they have to live off of. I know people are saying; "yes, but its still not doing bad compared to the others, its still selling well". This is true, sort of. But it went from incredible sales to decent sales over the course of 12-18 months and is on it's way down towards below mediocre sales. It doesn't matter whether or not it still remains above the worst numbers ever posted for the PS3 or 360, they were never on top and outsold the other two combined. Go back a couple of years on the forums, see the threads that spawned and the posts within. Take a look at the outlook of Nintendo, the assured way to 50% marketshare, the guaranteed shift of developer interest and effort, the ensured continuation of massive hardware sales for no particular reason other than simply being the Wii, the assured fact that it would easily outsell the PS2 because it was tracking above it. The list goes on. People say that the Wii is the most underestimated console this gen and perhaps even of all time. I say it is also the most overestimated.
Nintendo need to wake the hell up and not become what they scorned and cursed at the beginning of this generation (arrogant Sony and their insanity and proud MS willing to lose money and take shortcuts). They have to work at it. Hard.