Nintendo does what it thinks the market needs and what it can do while still making money.

Unlike Sony and Microsoft, this is its only business. It cannot fall back on revenue from other units (theoretically) because it is a game company first, foremost, and only.

As for the Wii's power, it is not being tapped because a lot of developers are lazy. But what is worse than poor graphics are poor play mechanics and poor quality control and poor game play.

Mike from Morgantown

I expect Nintendo to stick with their current buisness model, match the prior console generation graphically while marketing their new innovative hardware. Nintendo knows that hardware pricing plays a huge role in dominating the market. Making a console that is cheaper then the competition while turning a profit is Nintendo's goal.

Nintendo has made profit off the Wii since day one and they aren't about to produce a console that will put them in the red or even break even. They want to produce a cheap affordable console. I suspect that Nintendo will produce a console probubly as powerful as PS3 next generation with a new Wii mote, with WM+ built in a mic and maybe a camera who knows what else they will put in the next controller.

But I'm pretty positive Nintendo has given up on graphical power. The N64 lost to the inferior PSOne and the GameCube lost to the inferior PS2, the Wii won against the superior PS3/360, the DS Beat the superior PSP! Nintendo's going to stick with the strategy that makes them the most money. The one that gamers support.

So in conclusion I expect a Wii with PS3 HD visuals, no BluRay support. I suspect the competition will likely do similiar, I suspect PS4 will be only slightly more powerful then PS3 and the next X-Box probubly in the same boat. I don't think we'll see all that huge of a boost in graphical technology come 2011. Heck Sony might stick with the PS3 and not even release a PS4!

Alright well I have to point out that the NES/SuperNintendo were both graphically inferior to the competition and the GameBoy has always been way graphically inferior to the competition. The Nintendo 64 and the GameCube were the first two platforms in Nintendo history to sport superior hardware specs to the competition.

Now of course many argue that GameCube couldn't handle the visuals of the X-Box but I think RE4 proved that it was capable of alot more then it got credit for. But if you look at Nintendo's past especially the GameBoy versus GameGear the GameBoy:Colour VS GameGear then the GameBoy:Advance versus  that current generation of game consoles or even the DS versus PSP.

Nintendo has always been an innovator. N64 was simply innovating making the jump to 3D first. The Wii leading the way with motion controls, the DS with touch screen gaming etc...etc...

I believe they IF M$ and SONY dont do what they did this gen. And that is to make a cutting edge console and sell it at a loss. Nintendo will not sell their system at a loss and if SONY and M$ release uberly powerful systems we will see another gen like this one because nintendo wont sell at a loss

To answer your question OP: Defiantly not.

One of the reasons the Wii is successful is that it was not focused on graphics. Nintendo though Sony and Microsoft were overshooting the market. It turns out they were right. Nintendo has been successful with less graphical horsepower where Sony and Microsoft have not. I doubt Nintendo will take a step back.

"NES/SuperNintendo were both graphically inferior to the competition"

The SNES was only weaker than the Neo-Geo. The Trubo Grafx-16 and Genesis had faster CPUs but that was it.

Where do you get that the NES and SNES were both graphically inferior to their competition?

I don't think coming out with a graphically stronger console is taking a step back.

First of all, it's called Xbox. Second, if people think "Xbox" means "Xbox 360", then they need to get their brain checked. If someone was talking about Xbox 360 then they should just say Xbox 360 or 360.

On Topic: Yeah sure, Wii is weaker, by a whole 4MHz. Waste someone else's time, not ours.

Man there is no telling what they will do.
Truly I wish they would make just a regular system with regular controls and concentrate more on developing those great platformers we love, and less on motion controls. It's great and all, but I just love regular Nintendo games.