That is not how the market works.  The Wii U's potential is not 100M just because the Wii sold that.  That doesn't even make sense.  The market changes and customers move from one product to the next.   Each product has its own potential.

Also, Nintendo is going to act in a manner that maximizes profit now and in the future, and that is definitely not with the Wii U.  This thread and its entire premise is so silly.  Nintendo will drop Wii U so hard the first opportunity they get.  The real debate should be whether Wii U's successor comes after 4 years on the market or 5. 

Great posts, makes sense :)

The PS3 & 360 stretched out the generation to recoup costs.  Both the console makers and 3rd party developers wanted to stretch the generation, and they were fortunate to have the momentum and not have a reason to force them to release a console sooner as they were in roughly the same boat.  As consumers we didn't really have much choice but play PS3 & 360 for a while.

Wii U is in a different position though.  Sure they might want to recoup costs but they need to first get in a better sales position before we can talk about stretching it out.  Right now looking at Nintendo's financials I don't see this as a situation they would want to stretch out any longer than they have to do to save face.

No.

In that analogy, more fisherman came to the pond to catch X fish as well, except they're not throwing the fish back.  Now, there's less X Fish than there was previously.  Or X Fish have smartened up and they no longer like taking the bait the fisherman are using. 

You can't expect the same market and the same customers to purchase future products.  Product potential and ceiling is determined after its available as you can adequately judge market response.  Expecting the same level of sales as previous just because is just bad business practice.  You have to respond to changes and create the need and desire to get people to want to buy your product beforehand - it's never a given.

I think the Wii U will be supported until 2020, with the next console shown off at E3 2017 and released in 2018/2019

Mario Kart 8 on Wii U is native 1080p and 60fps even with 2 player split screen.

The problem with Wii U isn't the games, its the system

* Missing useful Friend List that allows Invite / Join
* Missing useful Notification system for friends invite / message each other
* Missing system level party chat for when friends decide to group up and play something together

Oh and the Wii U OS is as slow as it gets. It still takes 20+ seconds to access Notifications and 7+ seconds to exit Notifications back to main menu.

It's actually 720p native res. I agree with you, though. Considering online and social features, it's pretty much  worse than PS3. Also, loading times are a pain.

.....And thus its potential is severely restricted.... And you still have the problem of other competitors lapping up the market Nintendo once found success in.  Point is, the Wii U does not have a 100m potential.  It doesn't even have a 50m potential. 

Nintendo needs new consoles to breathe fresh life into their existing franchises they sell each generation.  Whether that comes from new control input schemes or greater power or more social features, it doesn't matter.  A new system generation means a new iteration of Mario Kart, SSB, Mario, Zelda, DK, etc to sell to Nintendo fans.

And for the case of a new console, it could also mean a much higher sales potential and/or a greater ability to attract 3rd party support (which is important btw)...

Don't be silly, Nintendo is a company that has $2 billion of SG&A costs.  In order to not lose money on a yearly basis games have to not only be profitable, but generate over $2 billion of gross profit.

The U is not providing much profit; the past years have been supported by 3DS and still decent DS & Wii software sales but those are going away.

FYE2014 DS software - 10,290,000 units
FYE2014 3DS software - 67,890,000 units
FYE2014 Wii software - 26,160,000 units
FYE2014 Wii  U software - 18,860,000 units
FYE2014 Total software - 123,200,000 units.

With those sales they turned an operating loss of ~$450 million.

Solve for average gross profit per game: 123.2M * X - $2B = -$450M
                                                      X = $12.58 gross profit per game unit.

Projected FYE2015 DS software - 0 units
Projected FYE2015 3DS software - 67,000,000 units
Projected FYE2015 Wii software - 9,00,000 units
Projected FYE2015 Wii  U software - 20,000,000 units
Projected FYE2015 Total software - 96,000,000 units

Projected net profit - 96M * 12.58 - $2B = -$792M

1st thing to note is Nintendo is projecting 27 million (22%) drop in overall software, so expect more losses this year.  A trivial calculation above shows they could lose ~$800M if they don't majorly improve operating costs or profit per unit.

2nd thing is Wii U has only a projected 1.1 million (6%) increase in software.  This can't be pelasing Nintendo, and they can either a) majorly downsize their home console teams to break even, or b) invest quickly in a new console.

While Wii U itself may break even or become profitable, there is also opportunity cost.  Supporting a console takes resources that could be invested to make something better.

PS3 potential is 160M, I can appreciate that, even if it needs to stay 20 more years in the market.