Accepting sacrifice has become a common M.O. New controllers and HD is not an either/or proposition. Why people think it is is beyond me. Having both is not asking for too much. Nor does it push system costs to $600 or higher.
"Cheaper system = bigger pool of customers"
Nintendo would LOVE to have's Sony's pool of, what, 80+ million units sold? Like I said, people will pay for what they're willing to buy. They could go after their customers if they made products those customers were interested in. Ignoring their existance like the 18-34 y/o males suddenly evaorated and trying to make my mom a gamer is dubious. I'd be somewhat amused to see a Bingo game where the controller acts as the dauber (and not amused in a good way).
"Nintendo had online at a level that rivals XBox Live back on the NES but noone wanted it"
Ehhh, this isn't exactly a good comparison. And I wouldn't consider stock trading to be a compelling gaming alternative to Live. Online activity, in general, didn't take off until the mid 90's. Anyone before that were largely hobbyists. The N64 not being online capable was basically ok since computers were still finding their bearings, but GameCube didn't have as much of an excuse. Live, even as broadband-only, was a pretty convincing service. BTW, online was big on the PC long before Live.
"You must have enough RAM to run high defination graphics. You must have more powerful CPU to push greater polygon counts so that it will look right on an HD screen."
Mid-range graphic cards, with a full 256MB of RAM can output an HD resolution and retail for $100, according to a trip to NewEgg. The cost to manufacture is a fraction of that. If ultra high-end graphics cost in the neighborhood of $80 to manufacture, a modest mid-range chip with 80% of the performance, sold at-cost, isn't going to freak anybody's bank out. Since TVs are stuck at 60 frames per second, that's still a hellalotta performance IMHO. It doesn't have to be polygon-for-polygon equivalent. I do believe in the notion of diminishing returns. But that line doesn't end at SD rez vs. HD rez.
"HD has been out for long enough that the price should have come down and yet it hasn't. It's one of those technologies which intends to remain as expensive as possible for as long as possible, it seems."
You must not do much pricing. My HDTV. 32". 1080i. Toshiba. Looks brilliant. $800. You don't need a tuner for a console. It's a bulky tube, but I'll take that over the new Plasma, DLP, and LCD technologies chasing their own tales just to re-create the blacks and colors that CRTs aready provide. Rationalizing the price of HDTVs doesn't change fact that there is an estimation of 25% household penetration by the end of the year, vs. the wireless networks that Nintendo hopes we have that won't be anything like that.
"Apple shifted the paradigm and put mp3 players in the hands of the non-technical. Nintendo aims to shift the paradigm and put their controller in the hands of the non-gamer."
That sounds like a Reggie speech. Apple created a new market where there wasn't much of one... and what market there was, was greatly disorganized. Consoles are a mature market. Revolution will not sweep the world by storm. They'll likely do better than GameCube, but partially because Nintendo also couldn't do worse. They're good enough to stay afloat on their fan base and war chest interest.
"For this reason, Nintendo's games might actually wind up looking better because their games won't be forced to run in HD, leaving a lot more processing power to handle polygons in better looking models. "
Well, hope springs eternal.