Are you serious about this

I just want to make sure

Khuutra took the first paragraph, I'll take the second.

The reason that Malstrom generally talks about doom and gloom for Sony and Microsoft is because of how the process of disruption works.  It is not a one time event (like the launch of the Wii).  Disruption involves a series of steps, starting with a low end innovative product, and slowly moving that product upstream to users who require more performance (the first steps seem to be the Balance Board and Motion Plus).  Historically, the disruptive product pushes incumbents out of the market.

More sophist, I'd say    

But you can't say Wii really undercut traditional values, new controllers have always been a constant in gaming history, Wiimote is a particularly well thought one, but it doesn't undercut traditional gaming values, instead it puts back one of them, fun, in the forefront.

What was disrupted by Wii wasn't the old style of gaming, but the trend of considering gaming progress centred mainly around computing power increase. Wii disrupted a vicious circle and this is more than just good, it's a godsend.

But my point was above all that things didn't happen as Malstrom describes them, except during the initial phases of Wii's success.

This can happen, it's one of the ways games theory provides for incumbents to be overthrown, but is it happening now? To be quite sure to prevail the new market must include and dwarf the old one, up until now it looks like the new market is roughly equal to the old one.

You seem to think the process is over.  It is just beginning.  Nintendo is going to continue to take steps to make their products more attractive to higher-end users.  One route Nintendo could take, would be to launch a Wii successor in 2012 (or maybe even later) that is at least as powerful as the 360/PS3, HD ready, cheap, and with 1:1 motion controls out of the box.  This console would further push Microsoft and Sony out of the market.

Microsoft's and Sony's motion controllers could fend off Nintendo, but the copycat never does as well as the initial innovator.  Another issue could be the level of support that those controllers get.  If it is anything less than full support, they are likely to flop in the market compared to Nintendo's offerings.

If Nintendo does see them as a threat, they could decide to innovate in a new direction with their next console.  At this point, I would believe that Nintendo could do it again, as they seem to have made it a part of their corporate culture.

@Rol:
Maybe, or maybe hardcore gaming troubles are more tied to performance growth focusing vicious circle. Maybe the biggest error of some developers was to identify all hardcore gamers simply with graphics whores and to lobotomize mind and ability challenging aspects of these games.

What you say is possible, but it doesn't prove Malstrom is right, fact is that you are confident about Nintendo's possibilities, Malstrom tends to be plain fanatic about them, he almost always starts reasoning correctly, but when it comes to foresee Ninty's success and Sony's and MS' doom he short-circuits   

What do we know up until now? That the current trend for Wii is hovering around 50%, not even big, further, successful innovations like Balance Board changed this trend out of the short term. And about crushing competitors, looking at the past, it doesn't look Nintendo's style, more MS' style in other fields. In the past Nintendo more than once did incredibly well, but it went always its way straight towards leadership without crushing its competitors, they always crushed themselves with incredible mistakes. Nintendo is a world apart, it doesn't need worrying about other than keeping on being itself, while innovating itself at the same time. It's a unique style, like Apple's.

@Rol:
Let's hope you aren't totally right about almost all developers running blindfolded towards the abyss, as this would be very bad for everybody, Nintendo and all gamers included.
I'd consider more likely individual studios too focused on raw power dying if they lose sight of more important values (but surviving and even thriving if power and graphics are only the icing on the cake of good games).

More generic games this gen than any other about sums it up? HD consoles that is, it's that way for a reason, devs shooting themselves in the foot. Also notice all the mergers and bank rupts.

SW and HW producers going bust, for the reasons we mentioned and a lot others we could take days to list always happened in the past, with cycles of prosperous and troubled times. Now we even have two opposite phenomena to make things less clear, as there is a bad crisis in general, but thanks to emerging countries the market is growing nevertheless. So saying Wii radically changed some rules is absolutely correct, pretending, like Malstrom, that by now it's all decided is at least presumptuous or stupid or both.