This is a serious question. If you don't understand what I mean, let me explain.

I don't think many people would argue with the suggestion that Nintendo has an excellent first party software lineup. The number of titles and franchises in their repertoire is unparalleled. Is it possible that their repertoire is too unparalleled? Simple example: if Resistance: Fall of Man were released on the Wii instead of the PS3, it would be competing against Twilight Princess (which got notably better reviews) and Super Paper Mario (Which got approximately the same reviews). Clearly, a lot of people who only have money for one game would sometimes buy Resistance, but also sometimes buy Zelda or Paper Mario.

By contrast, because it's on the PS3, it has almost no serious competition. No game is really in the same ballpark critically or commercially, and it shows: Resistance has outsold every other game on the PS3 by a fair margin. In short, one could reasonably argue that Resistance (And perhaps other games in the future) will sell better on the PS3 despite the smaller fan base, simply because it has fewer quality games to compete with.

Please note that I am NOT suggesting that people just buy Nintendo consoles for Nintendo made games, which I don't agree with, and is historically untrue (3rd parties did quite well on the SNES, which is the last time Nintendo received very strong 3rd party support). Instead, I'm suggesting that people buy Nintendo consoles for good games, just as is the reason to buy any system. The problem is, then, that Nintendo produces so many excellent titles that 3rd party developers might rather produce on a less popular system simply because the number of top-tier titles is lower and thus sales are less diluted amongst them.

Put simplly: one could reasonably argue that the breadth and quality of Nintendo's own software development has a downside. Anyone agree? Or want to pick me apart?

I buy Nintendo consoles because of their high quality games... So it's a good thing for me! And with Wii selling so hard there's lots of room left for 3th party devs who are shifting dev resources towards Nintendo DS and Wii! So it can be a combination of both!

Yeah, I think that's a line Nintendo's had to tread softly on... it's possibly why GameCube first party games (mostly the "Mario" branded games) were relatively weak. I think Nintendo was afraid of choking out the few 3rd party games that they got. It's also one of the reasons I think all the "big guns" are coming out this Fall. Get the major 1st party releases out the door now so that by mid-2008 when 3rd parties start to put out AA and AAA games, they aren't out-competed by Mario, Zelda, or Smash Bros. Nintendo's 1st party software is a huge asset, a bigger asset than it is a liability by far. It just takes some careful managing to mitigate how much of a liability it needs to be, and I think Nintendo's doing that. It's definitely a point of worry, though.

If Wii could do everything Resistance did, it would have sold +2 million by now. A mediocre game like Red Steel sold around a million on Wii ? If Red Steel were on PS3 it would have struggled to sell 200k world wide. Yes Nintendo make great games, but what type are they ? Great Racers mature action, shooters no.

I think Nintendo software is of very high quality and much more so than others that make similar types of games. Nintendo are however a company that makes only certain types of games and there are other companies that produce different types of games to Nintendo of equally high quality.

So does Leonardo da Vinci's work show the lack of talent or skill of other painters and artists, or does it show the brilliance of his own art?

Resident Evil 4 did sell well, though. It sold better than the Metroid Primes, all the Pokemon Games, all the Mario Parties... it sold well for a Game Cube game, being that the system comprised approximately 15 percent of the overall gaming market.

The last time Nintendo had serious 3rd party support -- and not a single AAA title like they had the whole of last generation -- was the SNES. Looking here:

http://vgchartz.com/worldtotals.php?name=&console=SNES&publisher=&sort=Total

It's clear 3rd party publishers did do well when they really put their effort behind a Nintendo system. The question is -- can they do as well on a Nintendo platform as they could on a system like the PS3 or Xbox360 that may have less systems sold, but also has less high quality first party support?

You want a real answer? It shows both.

I'm aware that this is a double edged sword, and totally agree with fishamaphone that the quality of Nintendo's software helps them much, much more than it hurts them. I'm only pointing out that it does have a downside. That's all. 

Let´s see the genres Nintendo is famous for. Platformers ( Mario, Yoshi, Wario games) Action-Adventures ( Zelda) Strategy ( FE, Pikmin) Shooter-Adventure ( Metroid) Simulation ( Animal Crossing) Third parties actually, have some genres that are almost free of Nintendo games. A realistic racer is an example. F-Zero and MK don´t appel to many people that play Forza and that stuff. Judging by CoD3 sales, the war shooter games could actually sell well on Wii, obviosuly with the normal options such as Online, Good Controls, etc. RPGs also sell well, check Tales Of Symphonia, Golden Sun, Baten Kaitos,etc. All of them have sold pretty well, and Nintendo doesn´t make any RPGs for consoles. As long as third partiies show decent games in that areas, they are bound to sell well.