Nintendo's rather stubborn refusal to sell anything at a loss is both their greatest stregnth and their most damning weakness. They coasted fine during the Gamecube era since even when the little purple box was a resounded flop in the last year with little worthy software, they still were profiting on the few that were sold.
If they sucked it up, opened another assembly line and started air lifting the machines instead of boat shipping, you'd see the whole thing turn around in an instant. Instead, we're left with the mystique of this amazing video game system that still sells out a year later. bloggers and mainstream press talk about the rapid success, but the very casual gamer base that Nintendo is supposedly courting and gaining isn't going to call gamestop every day or visit walmart on lunch break to find one.
I have a Wii, I enjoyed Metroid Prime 3, and I'm sure I'll get a kick from Mario Galaxy and Smash Bros, but thats about all I'm interested in for the next year or so.