In some ways I think the Wii U could be seen as an example of this strategy failing. The Wii U tech may be somewhat cutting-edge, but I could imagine Nintendo thinking that "touch screens are becoming cheap and plentiful, therefore this fits Yokoi's strategy". The price was higher than the Wii but it was still cheaper than PS3 or Xbox 360 were at launch...so maybe Nintendo thought it was making a compromise.

That said, Wii U has other serious defects from a business perspective. It's named as a successor to the original Wii, but the philosophy of the controller is almost polar-opposite. The Wiimote is all about getting up and moving. The Wii U pad is back to sitting on a couch. The Wiimote encourages multiplayer gameplay - people standing together, playing physically, handing off controllers. You cannot have 4 Wii U Pads so Nintendo tried to shunt multiplayer in with "asymetrical gameplay" with mixed results. The Wiimote was designed to be a user-friendly "TV remote" experience with fewer buttons than traditional controllers. The Wii U Pad is a hardcore controller with about 20 buttons/functions AND a touch screen shoved in the middle.

After naming it Wii successor but giving it a totally opposite controller, Nintendo then proceeded to relase very little software through the first year and a whole lot of software that was hardcore themed instead of trying to please the customers that had just made the Wii Nintendo's most popular console ever.

I guess my point is, this is a cool hardware strategy, but there are many elements to designing a successful game console.

Pretty much. Nintendo is particularly having trouble figuring out the meaning and implications of "fun twist to dated tech", despite having so much success with it in the past (on a hardware and software front). For example: a 3D screen requiring players to find a "sweet spot", and being much more of a presentational twist than a gameplay twist. Well, actually, the 3D is optional altogether. Fun! Worth the R&D and production cost! Wii U is even worse... although that's partially because Nintendo is almost completely failing to capitalize on what little potential Wii U has. :/

What happened? This can't be the same company that made Wii and DS, right?

Virtual Boy and GameCube... such wonderful devices to model a product after! If you don't learn from history, you are doomed to repeat it. :P

Yep, I said Nintendo is doooooooomed.

It's great that they experiment with new types of playing, but after last gen's push for motion and such gamers have grown tired and chosen traditional gaming over (questionably) gimmicky gaming, and Nintendo noticed that too late.