The Wii's success dictates that motion controls are the future of gaming. To say otherwise is foolish. All that matters now is to understand why it happened in the first place:

With their high-end gaming, Sony and Microsoft and the rest of the game industry snubbed low-end gamers and potential gamers with their consoles and games. This gave Nintendo an opening to cater to those shunned customers, hence the DS and the Wii. Their success shows that Nintendo knows how to do business in the longterm, whereas we are now seeing that Microsoft and Sony completely fail to do that.

Whereas Sony and Microsoft and most third parties cried and pouted and pontificated at the notion of making games for the masses, Nintendo saw it as an opportunity, and they took it all the way. You don't make customers by ignoring them, and you don't keep customers by treating them like shit and looking down on them. It's like that in every business, so why should it be any different for the game industry? The answer is that it is not, and the industry is suffering for looking down on "non-gamers" and "casual gamers" because they priced themselves out of the market, and with the economy in decline, nobody is willing to spend money on HDTVs to play their hardware. They see no difference in the graphics, so they choose the one that offers the most entertainment value for the least amount of money: The DS and Wii.

Nintendo isn't "competing" with Microsoft or Sony because competition means competing over the same values, in this case Microsoft and Sony are competing over the same customers and the same values (HD graphics and processing power), whereas Nintendo has disrupted them by changing those values (changing the context by which we interface with our games). Nintendo didn't zap customers with some kind of evil Hypno-Ray to brainwash customers to buy their hardware and software. The customers liked what Nintendo was offering, and they gladly gave them their money because they saw that the price was right for the entertainment value that the Wii offered. Not to mention that it offered an experience that the other two consoles could not offer.

The "game industry's" response to the Wii and the new market was to deride it. To mock it. But time has vindicated Nintendo and their business strategy, as it has put them ahead, while Microsoft and Sony rush to make their own motion controls to "exploit" this new market. However, this may all be for naught, since there is something that needs to be taken into consideration:

Nintendo has always sold their consoles in the green. Sony has been selling their consoles at a loss (as has Microsoft). They may have gotten away with just "throwing money at the problem" during the tidal wave of economic growth, but now that it's receded, we're beginning to see that neither of these companies are the financial geniuses they've made themselves out to be. Customers are not buying into HD Gaming, and that means they are not buying into their games. As a result their games are quickly losing market value.

Grand Theft Auto 4 cost 100 Million dollars to make, yet today you can buy it for less than 30 dollars new, or for much less used on Amazon. This is happening to most of the HD Games. Nintendo's first-party games (and a fair amount of third-party Wii and DS games) have managed to retain their full retail value for a long time, and some still do. That means their games are still selling for full price. That means that customers value those Wii and DS games more than most (if not all) of Microsoft and Sony's HD games. That means over time they will outsell their HD counterparts because they will sell more over time while retaining their full retail value. As anybody with half a brain would expect, you don't cut your prices when you are winning. The market is saying that don't care about HD Gaming. If they won't buy into what Sony and Microsoft are selling, then the idea of "Hollywood Blockbuster" games with outrageous costs and spending is unsustainable. Eventually the bubble will burst, and core gaming as we know it will collapse, leaving only the new market as a brand new frontier of gaming.

So I think it has become pretty obvious who has shown their business chops this generation. Microsoft and Sony's fickle spending is coming back to bite them in the ass, and with core gaming on the decline, both their gaming divisions may very well go under before they can do anything of merit with their attempts at trying to cash in on the market that Nintendo has created. The next few years (hell, the next few months even), are gonna be very interesting to watch.