My honest opinnion is that the Wii isn't directly competing with the PS3/360 , I think the direction of the respective consoles is completley different , different price points ,target audience , software , marketing etc.

 In fact most of the comparable aspects of the PS3/360 vs the Wii are different appart from the fact that they both play games , could you argue that the PS3/360 where directly competing with the DS/PSP for that reason ?

 I understand Nintendo fans wanting to feel that they are dominating everything in the same way the PS2 did last generation but that clearly isn't the case ,  Assuming they are in the same market the PS3/360 are likely to attain more market share than the GC/XBOX .

PS3 : High Functionaility (Cell Proccesor,Blu-Ray , PSN , Bluetooth , Wi-Fi  , HD etc)

XBOX 360 : High Functionality ( Xenon, XBOX Live , HD-DVD , Wi-Fi- , HD , Hard Drive etc)

Wii : Standard  Functionality (Wii-Mote Online play , Games , Friend Codes etc ) 

 PS3 Launch Price :£425

XBOX 360 Launch Price : £ 279

 Nintendo Wii Launch Price :  £ 170

 
PS3 - Average age 8-40 ( Guess)

XBOX 360 - Average age 8 - 40 ( Guess )

Wii  - Average age 3 - Infinity 

 I'd agree that the Wii is making waves in the tradional gamer market , with their maturer,more violent , more deeper offerings such a Zelda , MP3 , No more heroes etc but I don't think the Wii is able to capture the traditional gamer market in the same way that the PS3/360 has managed too. The new breed of gamer ( aka the casual) has been where Nintendo has found most of it's sucess with titles such as Wii-Play , Wii-Fit , Wii-Sports etc, So yes they're target audiences do cross over at times but I don't see direct competition  .

Example.

 MS stop supporting 360 , PS3 benefits signifantly , Wii possibly affected positivley.

Sony stop supporting PS3 , 360 sales benefit significantly , Wii possibly affected possitivley.

Nintendo stop supporting Wii , PS3 negible benefit, XBOX 360 neglible benefit. 

This is a discussion , so all fanboys , idiots please stay away if you have nothing constructive , logical to contribute . I'm entitled to my opinion as much as any of your are. 

Well of course the Wii isn't in total domination this gen. This gen actually strikes me as, at least so far, the most even ever. Even the ones falling behind are leading in others.

I guess what makes me call this an even gen isn't quite what is in the lead, then the lack of a real whipping boy. The 360 gets some flack for the RRoD, but still praise for the games. The PS3 and PSP were falling behind, but the PS3 got back up, and the PSP got a second wind. Nintendo is obviously doing well.

I guess how it relates to competition is that there doesn't seem to be direct competition, except for the PS3 and the 360, but even there, it's a far closer race than we thought.

Yes, they are.

"In fact most of the comparable aspects of the PS3/360 vs the Wii are different appart from the fact that they both play games"

Look to the heart of the matter, not the fringes. They're video game consoles, made by different companies, in the same markets, at the same time. What more do you want?

The Wii is a seventh generation console. It is competing with the Xbox 360 and PS3 directly. I'm a pretty big 360 fan, but I'm the first to admit that the Wii is beating the HD console's at their own game.

The Wii is directly competing with the 360 and PS3 for the money of all the people who want to buy a box to plug into their TV and play games with.

The people who don't normally play games are helping it, but those blue ocean types sure as heck weren't a majority amongst the millions of people who lined up for hours to get their little white box during the first few months after launch.

yes no matter how they try to spin it, they are competing with each other. even though its underpowered, all three companies are going after the same market.

It's doing both. The Wii is in a significant way competing directly with the X360/PS3 (stealing gamers from these), but it's at the same time in a league of it's own expanding to new territory.

If it's not competing why is it taking games from the other systems. Such as monster hunter 3 and fatal frame.

it IS competing with the 360 and ps3

they are all video game systems

They are all game consoles, so therefore they must be competing.