Nintendo caught a blue ocean market with the Wii. They tried it again with the Wii U and so far it looks like they whiffed pretty badly.
Wii U's failure was obvious from miles away, it only underscores how oblivious Nintendo's management is to what made Wii a phenomenon of global proportions.
If they miss on the incredibly fickle "blue ocean" they're targeting because of iOS and Android devices (what many attribute to the Wii's sudden and abrupt stall) then all they have is an under powered system with features no core gamer cares about.
What a bunch of nonsense (or funnily enough, as we would say in Croatian, "drek"; look it up). First of all, it's not a blue ocean strategy, the market they're targeting is already well defined, and has been for quite some time - their previous console helped shape it. Even the way by which they might attempt to achieve that (subsidizing console sales through subscription deals) has been already tested on Xbox 360. Unless there are revolutionary aspects to the next Xbox which we're not aware of yet, they're not trying to create a whole new market (i.e. pursuing the blue ocean strategy), they're trying to satisfy the needs of an already existing one.
More importantly, they're targeting the core gamer at least as much as the broader entertainment consumer, if not more. Their target group hasn't changed, it's broadened, and they're making sure that core gamers, among other types of consumers, have plenty to be excited about. Just because another console might have more processing power, that doesn't automatically make it more appealing in the core gamers' eyes, that's just one of many important factors, and quite low on the priority list for anyone but people who make up only a small fraction of an already relatively small group.
On the gaming front they're going to compete with Sony head-on, but they're also investing a lot of resources in areas which Sony seemingly plans to properly tackle only a few years in (and have no doubt about that, Sony
will go for the same broader audience eventually; that is, if PS4 proves to be a sustainable platform in the long run). They could fail, of course, and they could fail spectacularly, but that will likely have little to do with a difference in processing power that is within the same ballpark as differences in the previous few generations, including the one in which Sony's underpowered console (compared to GameCube and especially Xbox) had no problem appealing to the core gamers and smoking its competitors.
not to mention how much better Sony's first party releases will clearly be.
Clearly. I wish you had any proof for that statement when, looking at this generation, Sony's first party games were generally neither better critically nor commercially received than Microsoft's.