Nobody wanted a 180 bucks PS2-o-clock graphics system, Wii only sold due to the controllers and to people who wanted that kind of different system. The 360 was cheaper than the Wii for years before Wii sales tailed off at all, and even on SD TV 360 and PS3 look light years ahead in their 3D game engines, Wii is barely an improvement on Gamecube graphics. Nintendo targeted a whole new type of gamer, just like Sony did with PS1 which hammered Sega/Nintendo sales into the ground. The Saturn and N64 sold well enough based on past market size predictions, PSX just threw the rule book out of the window and expanded the console buyers market by 400% by targeting a completely new group of gamer.
It's no different to Eye-toy either really, just the fact it has been possible for two decades using Amiga 1000s is cool enough in my opinion. Obviosly the whole post was tongue-in-cheek and it's not something you could have done at home on a budget etc.
YMMV 
Im not a nintendo guy at all, but I think the thing people underestimate it that "normal people" don't care about graphics. Heck, nintendo DS games look like amiga games and they sell by the bucketloads.
Nintendo is perfectly fine with the fact that they can't do a Killzone 2 because they can toss out a zelda or mario title with half decent graphics and people will buy it, AND they can sell to people who don't care for the FPS / FPSRPG stuff that makes up 80% of video games today.
