It was plain inevitable, Microsoft is the one with the big marketing dollars, the dominant online service when it launched, the first HD console on the market etc etc.

The original Xbox didnt do everything right....

They launched way too late, didnt garner anywhere near as much 3rd party support, were more expensive, and all kinds of other issues....

The life of the original xbox and the 360 litteraly couldnt be more different

If we look at the end of the last generation, no one would expect Sony and the PS brand to take such a fall.
Nintendo and MS sure didn`t expect and proof is that MS was first on the market, first HD console on the market and first to truly embrace online gaming. On Nintendo`s side Wii had to be because Nintendo knew that another console like GC or N64 just wouldn`t cut it.

Truth is, all these bets worked out for MS and Nintendo: MS stole the marketshare from Sony and Nintendo widened the market.
Of course that Kinect helped a lot the Xbox 360 but at the same time that same boost is fading fast (just look at the data for Kinect adventures and you will see that.
Question is, will a Kinect 2.0 make a difference next gen? I honestly don`t think so.

If Nintendo has lost ground this generation in the red ocean? Yes. Can Nintendo take it back? Yes. Nintendo lost it`s dominance to Sony and Sony to Nintendo and MS. Why can`t things change again?
The question for Nintendo is can Wii U keep appealing to casuals and appeal strongly to the hard core gamers again? I think it can do both things. At least it has all the chances to achieve that goal.

What is this about? Nintendo won this gen, blindsiding everyone, hands down. Yes, MS is also a big winner, r*****g the dog s*** out of Sony. But this was expected, because everyone knew once M$ entered the scene, it was only a matter of time before they took over (so called "hardcore"). They were the NEW BIG BULLY on the block, with Sony rightfully crapping in their pants.

Nintendo passive aggressively backs off, creates a system you can have ALONGSIDE either of the two "big red" machines. But as the two dumb cavemen are killing each other, one battling RROD losing asstons of $$$, while the other is overpriced to death but no one gives a **** about blu ray...Nintendo's sippin mai tais on their blue ocean. Then the herp-a-derp copycat cavemen realized "OH, WE MUS COPEE NINTENDO NOW WITH TEH MOSHIN CONTROLE". Kinect was a disgrace (I can't even get good value at gamestop FFS), and Move was so shameless that people ignored it, despite being better than wii remote plus.

Big Winner by far (profits + units sold)
1. Nintendo

Mongolian Kamikaze mass destructor (big $acrifice to bring down Sony)
2. M$

Fall of the Roman empire (every dog has its day)
3. Sony

I can see Microsoft gaining even more ground in next-gen and being at top of generation, while Sony and Nintendo fighting for 2nd place (and I'm saying this as someone who prefers Sony).

Super Smash is like Fifa, the game that you play when a friend comes over, i.e. party game. I'd say they're played by very broad audiences, which has to be the case if you sell so much. 

Anyway splitting any console audience in red and blue ocean is pointless

Well, I have played all of those games, and with the exception of the wii sports games, all the other games would be better without the wii controller.  I won't even play mario kart with the wii controller since I have the option there.  The only thing the wiimote control scheme adds to those game is bad controls.  In my opinion at least.  

I think this is the post that I've agreed the most on this forum.

You're cherrypicking...

On the points that matter (and those you mentioned ironically enough), they were one and the same, bar one (arguably):

"I think MS has just done a great job of:

• advertising their system, CHECK
• getting the most 3rd party support of any of the 3 consoles, CHECK (same strategy)
• getting a good price point, CHECK (it was fine and very competitive with the PS2)
• and having the definitive online space for consoles. CHECK (Best of the pack)

"

Right. MS grew from 25m units in one generation to 69m the next by appealing to the red ocean. And despite all that revenue growth, they failed to turn a profit on both generations.

You're saying that the answer is simply not to turn your back on the red ocean, but things are never that simple. Resources are finite, and everything you choose to do (or not do) has an opportunity cost somewhere else. You can speculate that Nintendo would have been better off if they'd catered more to the established consumers, but it's just as possible that they would have been better off if they'd abandoned the "hardcore" crowd altogether to focus entirely on new users.