Yeah, I'm perfectly open to them proving me utterly wrong; but it just seems so obvious:
For the traditional market: lacks third party support, isn't an upgrade from their current systems, more expensive than current systems, controller may be off-putting, brand image is still not aligned to key demographics.
The casual/expanded market: unappealing USP that doesn't seem novel, complicated/confusing USP, too expensive. May not need an upgrade. And that's assuming a lot of this market hasn't vacated the console space.
It's as if they never actually asked themselves...
"Who will actually buy this?"
...when they went about designing the product.
Perhaps they simply bought into the perception some people have of them as being more innovative than everybody else/ahead of the curve/trendsetting (EDIT: Oh, and "revolutionary" apparently) and thought they didn't actually need to take a read the market in their product development. Or they really think, as some of their fans do, that their software is better than everyone else's and a broad consumer base will buy it just to play their traditional franchises.