The XBox and Playstation are going head-to-head to own the living room. Nintendo decided to focus on simple, fun gaming systems. The handheld DS (a next generation Gameboy) is popular with kids and commuters. Recently they released a small console with innovative controls with motion sensors, letting users interface with games in already familiar ways.
Nintendo knew that it could not compete with Microsoft and Sony in the quest to build the ultimate home-entertainment device. So it decided, with the Wii, to play a different game entirely. Some pundits are now speculating, ironically, that the simplicity of the Wii may make it a huge hit.
The Immutable Laws of Marketing wouldn’t say Nintendo is in third place. Instead, the company created a new category where they could be number one.