That's all fine and dandy, but that doesn't change Nintendo's predicament. An actual blue ocean product if we're going by the definition of it for 2012/13 would be like a sex console ... as silly as that sounds, no one is really making anything like that. 

Another casual-centric console is a RED OCEAN idea in 2012, in fact it's probably the worst kind of red ocean idea. Trying to make another "Wii" console and thinking Wii Sports/Fit/Party + NSMBU + more mini-game-athons like Nintendo Land was the answer when you can now get hundreds and hundreds of simple-to-play/short burst game experiences on your iPhone/iPad/Android device that everyone has now was even more of a red ocean idea than just competing with Sony outright. 

How can something be blue ocean when its being imitated and offered a 1000 different ways by competitiors?

That's like saying the GameCube is by definition a blue ocean idea too, as its the successor to the NES, which was once a blue ocean product. Obviously things changed from 1985 to 2001 and Nintendo found themselves no longer as the unique one of the bunch. 

Casual gaming is not blue ocean anymore, that's the bottom line, you can hide behind a dictionary if it makes you feel better, we all have seen the very obvious collapse in sales for titles like Wii Sports, Wii Fit, Brain Training, Nintendogs, Guitar Hero, etc. while smartphone/tablet gaming has exploded. 

They said that they are trying to get the hardcore gamer, but they are also not trying to compete with the other two. That isn't a contradiction, and it is true.

They weren't selling that feature with the GCN. That's completely different. One is describing the possibilities, and the other is describing a core hardware design decision.

The Wii U tablet honestly was made with the hope (on Nintendo's part) that it could spur the Japanese game community again.

Japanese gamers like to play their handheld at home since the TV is often times in use by other family members, Wii U was Nintendo's attempt to rectify that.

And yes they hedged very heavily on casuals who supported them with the Wii coming back for things like Nintendo Land, NSMBU, and Wii Fit U.

They were let down by both of those audiences.

Honestly it's a strategy that probably could have worked, but Nintendo got their knees cut off by the rise of Apple/Android, something they probably did not forsee to the same extent when planning for the Wii U began in 2009 or so. The iPad was not out yet, the iOS shop was just launching, and smartphones were still relatively in their infancy.

They tried the Ocean strategy while trying to win back the core gamer.  The problem is they failed at both, and came off as "Another Casual Wii" to most people.

My "Counter argument" is that they tried both the Blue Ocean strategy while also acting like it was for the hardcore as well.  No strategy is 100% the same.  However it is close enough that eveyone here knows what I mean when I say "Attempt another Wii generation."

Wii U is Nintendo's attempt really to bridge the gap between the Wii and the DS lines, because I think Nintendo liked that the DS, while still having successful casual games like Nintendogs, could still do well with more core third party product, whereas Wii Sports seemed to overshadow everything else on the Wii other than Mario Kart and Wii Fit.

If they could get every DS owner in Japan to also buy a Wii U to play at home (using the quasi-portable nature of it) they probably thought they would rake in the $$$$. That and they'd still keep the Wii audience because they'd stick closely to the Wii-branding/design, allow for Wiimotes to still be used, keep lots of mini-game comps coming, etc.

That was their idea, they just didn't look to their left where a giant Apple branded freight train was coming to run them over.

And to be fair, Nintendo's not the only one that got caught in that wrecking path. Many other once-proud companies like Blackberry, Nokia, even the mighty Microsoft themselves got hit hard. 

In a world where there is no Angry Birds, Plants Vs. Zombies, for free/$1, in a world where everyone and their grandma doesn't have an iPhone/iPad/Android device, maybe Nintendo Land is a big hit. It's not like Mario & Sonic was anything special but that sold 7+ million, today it can't even get to 500k. 

I agree with that definition of blue ocean, but by that definition, products like Wii Sports and Wii Fit and Nintendogs and Brain Training are not blue ocean anymore.

The idea of retro-style, easy-to-play, simple games that are quick fix for novice/casual level players is NOT blue ocean anymore. There are thousands and thousands of those games now available every minute or every day (for free often) in 2013. That's the reality, that's not opinion anymore. 

To be honest the threat of smartphones/tablets is far bigger than anything Sony/MS ever posed to Nintendo, I think if you gave Nintendo a choice to live in a world where Sony/MS are their only competetion and smartphones are gone they would do cartwheels naked down the street to get it done. 

I think it's also a bit naive to imply that "well just make a blue ocean product, and you'll have success". Well that's like going up to a music artist and saying "just make another hit record, it's simple". It's not easy to do that. By the law of averages actually you're likely to have more misses than hits, that's also part of the blue ocean strategy that people convienantly don't like to talk about. Blue Ocean doesn't mean it's a golden cookie that allows you to have success right off the bat all the time.

Nintendo was counting on the Wii audience to be there for them for at least another 5 years ... they were mistaken. 

I still can't see where Nintendo is in direct competition with either Xbone or PS4 can someone bring it down to crayon level for me?

I'm not sure how Nintendo's online infranstruture is really defendable as it just does the bare minimum, and is far below the standard set by XBL and PSN (which isn't very high).