Theory 2: A manufacturer will succeed with their second console.
Lets get the holes in this theory out of the way...
Ok so the 2600 doesn't really fit this theory, but they technically released the pong system first. Besides that they get a pass as being the first home console on the market that had a chance. Taking price and market conditions into account.
Sega, poor, poor, Sega... they made the mistake of getting into the market during the same generation as Nintendo did. I would theorize if they would have waited, and started with the Gensis that they might have succeeded more long term. But since they were competing with Nintendo at the same time, one had to be the victor, sealing Sega's fate. If they would have waited one generation I think the Saturn would have been a better machine and could have filled in where Nintendo failed with the 64.
Now on with the rest of the theory...
The first system seems to be a "testing the market" piece of hardware. It is used to gather information about what works and what doesn't, from both a hardware and a software standpoint. You see the same thing with games like Mega Man 2 was way better than the original.
This allows the company to really put forth an awesome second release product. This after they learned what not to do from the first product. I also think that they realize how much money there is to make if they dominate the generation. This means, if they have it, the money will be spent more wisely in coming up with the hardware and the software.
After the success of the second system, the company gets cocky, and starts putting out shit, because they think their brand will carry them through anything. This opens the door for the competition to pounce. This happened with Nintendo when Sony came along. The N64 was not able to hold the brand. Nintendo's crappy support of 3rd parties allowed Sony to enter the market without that many problems. This enabled Sony to learn the ropes and push out a kick ass system in the PS2, of course by this time Sony had gotten pretty cocky themselves with the success of the PSX that the PS2 launch wasn't very smooth. Over time they were able to build and immense library that is still worth playing.
During this time Microsoft entered the market. Making the 360 their second system. While it isn't the clear winner, if they keep having success's in other markets like Japan, their library will fill out and become more well rounded. And like the PS2 the 360 may just be starting off slow. Only time will tell if this generation will keep people coming back for more.
If we take this theory to the next generation... I see the Wii as a first release for Nintendo. Nintendo is trying to gauge the market with it, just like they did with the NES. However this time, they have the knowledge gained from five generations of product launches. Also if you were to look back at the NES, it was much more of a casual/family gaming machine. If the Wii mark 2 could do for the industry what the SNES did back in the day, I would... well... lets just say... many spontaneous orgasms would explode out of my body (was that subtle enough?)