Of course, third parties would develop for a monopolized console, but if that console were the Wii it would alienate a lot of gamers like myself that expect the industry to move forward. 

The first console I owned was the Genesis (which you seem to have forgotten coexisted with the SNES), but the first console I played was Intellivision.  I'm actually part of that unique generation that didn't play video games at all during high school because when the technology didn't improve we all lost interest and found other things to do.  I've watched the industry grow from generation to generation and each new cycle of consoles has completely blown away what has come before.  However, with the Wii Nintendo's focus (which has worked out amazingly for them) has been on expanding the videogame audience to non-gamers and core gamers (now a minority) have been virtually ignored. 

Nintendo has frequently frustrated me as a company because they seem hell-bent on holding the videogame industry back on a technological front: sticking with cartridges when everyone else went to disc-based media, staying with SD when everyone else has gone HD, sticking with Dolby PLII a generation after XBOX went 5.1, etc.

^^I thought this hypothetical scenario was referring to the next generation.  It would be impossible for Nintendo to monopolize the 7th generation.  In which case, the console we're talking about would be HD; the people from Nintendo have stated so.  As for the core gamer, I consider myself one and do not feel alienated.  How can I?  In little over three years they've pumped out a quality game from many of their main franchises.  

I wholeheartedly disagree with your view that Nintendo holds back the industry.  Nintendo has brought forth (and made standard) many advances to consoles including analog sticks, rumble, and now (hopefully) motion controls.  The cartridge storage limitations was troublesome but I do miss the unnoticeable loading times.  I look forward to the next medium that will reduce load times.  The SD thing has been explained to death: most people in the world do NOT have HD televisions.    

Many people keep claiming Nintendo only focuses on the 'casual' market.  Yet they have clearly made games marketed towards multiple markets.  Their 'Wii' line is not the only games they make. This generation is leaps and bounds above last generation.  You know, the GameCube?  And they are clearly making games that appeal to 'gamers'.  Not just casuals.  You know...Mario Galaxy, Twilight Princess, Wario Shake, Metroid Prime 3, Fire Emblem, Mario Kart, etc.  In its first 2 years, the Wii has already surpassed the GameCubes best Nintendo based library of games.  Punch out and a new Kirby game on the way.

But more than this, they set up the Wii and DS to be heavily Third Party friendly consoles.  And, at least on the Wii, they didn't show up.  It really bugs me that people keep blaming Nintendo for trying to turn everything 'casual' when its more the third parties who have been focusing more on a 'hardcore' and 'mature' kick the last 8-10 years.  And as you just said, that market is the minority.

Nintendo held back in the technological department on the N64 and the GC and it didn't pay off.  But there was a reason for it.  The same reason they did for the Wii.  because they didn't want their systems to cost $600 dollars and they wanted their systems to be primarily about playing games.

It didn't pay off for the N64 or GC, but it certainly has payed off on the Wii.

Most people in the world don't have HD televisions but a significant chunk of the population does and we shouldn't have to wait another generation for our videogames to take advantage of them. You can make HD games that can be downconverted to SD and still be playable. I hardly know anyone anymore that doesn't have at least one flat panel television and 2009 is the end of the line for analog TV signals in the US. That is going to drive adoption even more. And no 5.1 at this stage of the game? Really?

Nintendo's press conference at last year's E3 made their position clear: they don't care about core gamers because they don't have to. Fair enough. It's not such a bad thing to have different consoles for different markets. I think Nintendo recognizes that even if some of the posters in this thread do not.

I wouldn't care at all. I'd buy the thing. But yeah, I don't even see this happening.

I think of the Wii did drive all of the other companies out of the market, then you would see someone else enter the market with a console that was economical like the Wii, but that had a game library that was in response to many of the criticisms that have been raised against the Wii's the majority of the Wii's library. It could be a console tha caters to more niche kind of games, but a company could turn a profit with such a system because the Wii is two year old tech, so a machine could be made that was at least as powerful with a cheaper price now, and it would have a sizable following with the right games. I believe that if the 32 bit era had come down to Dreamcast versus N64 with no ps1 and no ps2 or xbox on the horizon, then Sega would have won.

Rest assured, markets abhor a vacuum. Or rather, greed knows no bounds. Even if Sony and MS both leave the market somewhere down the line (which is entirely possible), some other company will decide to enter it before the Wii gets a successor. Actually, that kind of goes without saying; there's no reason to pre-empt the next generation of systems when you're the market leader. And for all we know, it may even be a small-time company, possibly even a current game developer for one of the 3 current-gen consoles, who enters next.

Actually, I'm quite surprised that no new company has tried to enter the market, seeing as Nintendo rather nicely lowered the general barriers to entry... No willing investors at the moment, I'd guess...

It's impossible. It's also unlikely that either sony or M$ leave. Why? They'll just make life MUCH easier for the other one by quitting lol. So why would both leave again?

It's not impossible, Pristine, just not likely to happen simultaneously. It's not uncommon for same-value competitors to basically destroy each other in their race to outdo one another. Happens in all manner of industries all the time, and the mutual destruction is most common when a disruptive competitor offsets the advantages of the competing companies and forces them to become niche.

Sky Render ladies and gentlman.