In a discussion over in this thread, i postulated about why exactly i think Nintendo will put their next console out right on schedule as it were, in the holiday season of 2011.

1) Evergreen won't keep the console afloat forever in Japan. Now, we know that Wii's slump in the land of the rising sun is due to the current slump of major software releases. Something that is soon to be alleviated (starting this month with Monster Hunter G, actually), but i think this proves that Nintendo can't keep the console going for a very long time unless 3rd party support swings more severely in their favor in the long run. Nintendo could try to hold on in the long run, evening things out with European and North American sales (and maybe sales in other markets), but it would be to the great detriment of their Japanese strategy, barring any unforeseen changes

2) According to Miyamoto, they are taking the coming DTV transition in Japan (scheduled for July 24, 2011) very seriously. Despite their apparent advantages, they don't want to get completely left behind by technology. Now, it is definitely true that no fundamental incompatibilities will result from the DTV transition (Wii works on HDTVs, after all), but it seems that with the Japanese going there, America having already gone there by then, the time will be ripe for them to step forward into the HD age.

3) Between backwards compatibility, a 3rd-pillar sort of strategy like with the GBA and DS, they can ease in the North American and European markets that are still very receptive to Wii. The process of upstreaming, similar to what they are doing by migrating the Wii Sports folk up to Mario Kart Wii and beyond, they can migrate the Wii users on ahead, by creating an experience that is unique in their next console, something that brings the immersion experience a step forward, and attracts new users, thus avoiding the potential damages of a market split.

I think it would be folly for Nintendo to follow conventional wisdom and hold on to Wii as long as they can, precluding any movement forward. Not following conventional wisdom is what got them here in the first place

MHG won't alleviate things therein Japan. A major release would, a major core release. Games like FFCC:TCB, MH3, DQX, Tales of Graces, Samurai Warriors 3 or a new big core IP from Nintendo. And no 2011 will never happen, Wii Fit would be still selling by then and the Wii is selling more than 25 million consoles each year.

But if Nintendo wants to see ongoing big sales, they need to start releasing some big games of their own soon, WSR is not enough. E3 will show their strategy, if they plan on going all out casual then yes, Japanese sales will be at risk, but if they show some big games for the core as well, then we can say Wii sales will pick up speed once again. After all, they can't rely solely on Wii Fit, it was a risky move by them to be relying on it mostly, but it worked out. They will need to showcase a huge array of games at E3 to convince a core gamer to buy their console rather than another. I think at this E3 is where Nintendo will make or break their view with the more traditional gamer.

i doubt it they will hold on as long as they can. They are making money head over heels and until they see the market embracing the HD market more they have no reason to release a new console

Needs to beat the PS3 in graphics, and be the same price as PS3 is by then.

Then the pS3 will be doomed

Sounds plausible to me. But only if Nintendo can put together a package which is a substantial upgrade to the Wii with a non-subsidized price tag of $300 or less. Substantial upgrade means more than just beefier processors and more memory. It needs a hook that can really grab people.

It's worth remembering that a Wii HD won't kill the Wii overnight, just as this generation still hasn't killed the PS2. The Wii will see healthy sales two years into the next generation, though it's price wil be reduced by that point.

I think in this case more processing power could do the trick. Something like Wii Sports: Team Sports which took advantage of more processing power to coordinate a football game (either kind of football, really). Keep it simple, kinda like Wii Sports Baseball, but run everything much more like "you're in the game," or something more physics-intensive

Between that, and building from Motion Plus, then taking on a few of the features they added with DSi and some of the features of the PS360, they could build a compelling package from the start. Processing power for the sake of it, no, that wouldn't help, but more power for a purpose could be quite compelling to the blue ocean.