Sure is a lot of over-simplification of the 5th and 6th generations in this thread. There is rarely just one reason that anything happens.

A large part of the 5th Generation isn't just "what Nintendo did wrong," but also a large part of "what Sony did right."


Nintendo made a whole wealth of errors during this time:

1. Virtual Boy--nothing like shaking up your powerful image with a colossial failure.
2. N64 hardware--The N64 and Saturn were both systems notorious for their difficult-to-handle inner workings. Only first and second party devs for either company were ever able to utilize these machines well. The N64, for all it's power, was limited in a great many ways--for one, it could only handle very small textures, which looked terrible when stretched or blurred by the anti-aliasing in the hardware.
3. Cartridges--Expensive to produce, lengthy production time, limited capacity.
4. Ego--Nintendo had the same ego going into the N64 that Sony had with the PS3 (coincidentially, the third consoles for both companies), which resulted in consumers being turned off, and third party devs being annoyed.
5. Late release with a then-high price tag. Coming out a full year after the PS1 and more than a year after the Saturn was bad enough. Coming out at $250 when Sony and Sega had already price-warred their machines to $200 made things worse.
6. Pathetic launch. The N64 launched with only two games in Japan, and three in the US and Europe (as I recall--don't quote me on Europe).
7. Lackluster 3rd party support. Which, of course, is no surprise because Yamauchi had long turned-off many devs, and sticking with cartridges made others unhappy. Add to that the complicated hardware, and you've got a recipe for failure (though the N64 is hardly an actual failure).
8. License fees on N64 were higher than on PS1.
9. Relied too heavily on the strength of their first-party wares and an unproven "Dream Team" of developers that generally failed to deliver on promises.
10. The biggest mistake they made was not reading the fine print early on when working with Sony causing a panic reaction that screwed over the company big time leaving Sony with an excellent model for a video game console.


What Sony did right:
1. The PS1 was a breeze to work with for developers. Easy to utilize hardware.
2. CD-based allowing "sky's the limit" to game sizes and very fast production cycles.
3. Catered to third party companies, which wasn't hard to do considering all the time Yamauchi had spent bullying and controlling them.
4. Had all the big names on their side: Konami, Square, Enix, Capcom, etc.
5. Affordable price ($300 compared to Saturn $400, and a year later, $200 compared to N64 $250).
6. Kept their machine on schedule. Nintendo delayed the N64 so long that it was a massive window of opportunity for Sony to step in, and a massive headache for developers and fans. Sega rushed the Saturn out 6 months early which worked well to piss off developers and retailers--some of whom dropped all Sega support because of the surprise announcement.

What they did wrong with the Gamecube was release a purple lunchbox as a console knowing there was already a public perception that Nintendo consoles were for kids.

5th gen: falling out with squaresoft and the whole ignorance towards CDs as a gaming medium. Their arrogance in previous gens towards 3rd parties prob didnt help, wouldnt suprise me if a few 3rd parties didnt enjoy making money with sony whilst being able to stick 2 fingers up at nintendo. i couldnt care less tho, n64 ruled! some of the best games ever are for that console imo. ps1 was cool too

6th gen: lack of innovation and direction. i think the gc was nintendo at its creative low. cant think of many games that were a radical improvement over their n64 prequels. the gc was just nintendo trying to make its own ps, plus sony were so far ahead with the release of the ps2 this gen was pretty much over straight away.

If nintendo released a gc2 i think the e3 just gone would have been nintendos announcement of becoming a 3rd party.

They should have given all of their female characters bigger knockers.. and chainsaws instead of hands and guns instead of legs. And they needed more cutscenes showing said knockers and weapons.

So the game they should have released would have Peach, Samus, and Zelda flying around the galaxy murdering people with their weaplimbs and stealing spaceships.