You know, nobody has been able to stop Nintendo so far, but the company ain't invincible. And when the competition is made up of these giant corporations, it means that business becomes even more risky. Until the past few months, when Wii started to take shape, I was seriously concerned that this could be Nintendo's last home console. Now I'm pretty confident that Nintendo is going to earn back some of the marketshare it lost in the past three generations.
Of course, there's also some question of whether MS wants to beat Nintendo at all. I think right now, looking at Moore's perspective on Nintendo, MS is thinking, "Okay, these guys have a cool idea, but they aren't really competing for the same territory as us." MS figures a lot of people will buy both, Wii for motion gameplay, and Xbox 360 or PS3 for graphics. MS wants to be the graphics console instead of PS3 - that's their market. Furthermore, Microsoft is always looking for ways to bring Sony down. Sony has the momentum, and Microsoft wants to turn that around. Hence Microsoft employees endorsing DS over PSP, and now Wii as a companion to Xbox 360.
But what if Wii takes first place? What if it costs MS potential marketshare? Then Microsoft's attitude will change, and I imagine you'll see MS taking steps to compete with Wii, mark my words.