Nintendo have already responded with the Wii MotionPlus - that'll have far more support than either of the other two motion control options with a potential user base of 20 million by the time Microsoft are ready to launch Natal.
I don't think Sony have any idea how to market their motion controller as seen by the launch line-up. Microsoft will mimic the launch of the Wii in the way that they tried to mimic the PS2 with the launch of the XBOX 360. People that can see the parallels will be able to understand what I mean when I say that.
Now lets head back to Nintendo. They know that they are going to be heading into a red ocean fight next year. They are ready for that, but they also know that they thrive in the blue ocean environment. In steps the Vitality Sensor, a sensor that is not targeted at anyone that owns a Wii at the time that it launches. the Vitality Sensor will again move the Wii into a blue ocean environment.
The Wii has been in two main environments since the beginning of the generation, those being core and casual to those on the internet but in Nintendo's eyes:
1. Blue Ocean - The market of consumer who do not actively play video games, this market has no competitors (values include accessibility and motion controls)
2. Red Ocean - The market of consumers who do actively play games, this market has competitors. (values include graphics and traditional controls)
If Nintendo had no plans for the Vitality Sensor then the first market on that list would disappear not because there would be nobody who does not game actively (I mean this in that they don't play regularly, not to do with motion control) but because they would have competitors in this space.
In 2010, the Vitality Sensor will become the main differentiating factor for the Wii, just as the Wii Remote was back in 2006. Nintendo's former blue ocean will be red ocean. The values of this particular market (motion control) is what Nintendo will be both defend and move away from. The new values will be about relaxation and Microsoft nor Sony will have anything to counter it.
So it'll be interesting.. Nintendo have done a good job in the motion control market while they've had no competitors and they've done reasonably well in the traditional gamers market where they've had two fierce and much superior (going by the traditional values) rivals.
I think Nintendo will continue to do well because of three key points:
1. They're moving upstream to more aggressively appeal to the traditional market through the Wii MotionPlus. Unfortunately It won't be until Zelda Wii releases that Nintendo will have a flagship traditional system seller. Metroid: Other M, Mario Galaxy 2 and Retro's new project will all help next year.
2. They continue to appeal to their motion control/blue ocean market. Wii Fit Plus, NSMBWii and Wii Sports Resort are all examples of titles that bolster this market. I think Nintendo do need to be weary though as they haven't had a breakout hit that truly uses Wii's unique interface since Mario Kart Wii. Nintendo need to be aware that consumers want to experience the next level of what the Wii Remote can deliver.
3. They are continuing their strategy of expanding the market. There are still tens of millions of people that would game if there was software available that they found interesting. Nintendo are trying to appeal to these people. The Vitality Sensor is the next step in getting people to buy a Wii console. If Nintendo can manage to deliver another Wii Sports-like revolution in video gaming software then Wii can absolutely return to its 2008 sales level worldwide. If not, it can certainly continue on a similar path that it's on right now.
All in all these three parts to the Wii strategy will enable Wii to continue to outsell it's competitors in 2010.