I have to wonder how thought out their strategy was - because I could see this as having been planned all along.
I wonder if...
1. They were confident in their "casual gamer" approach and the ability for motion controls to bring people in
2. So they make their console SD, less powerful, etc. and make lots of money by selling it at $250 for years.
3. MS and Sony make their consoles uber powerful by comparison, sell them at a loss, which makes lengthening the console life-span important in order to recoup costs / make money
4. MS and Sony gravitate toward the "casual" market, pin their hopes on motion controls to extend the console life-span
5. Nintendo is free to move first in ending their console's lifespan, releases something significantly more powerful right at the time when MS and Sony are trying to extend their consoles through motion controls (the general concept of which is no longer novel)
6. Sony and MS are now pressured to do what they don't want to do: release their next system sooner rather than later, etc.
You have to wonder how much of this "all according to plan."