ArsTechnica has an article called How the Wii was born which talks about the design considerations the engineers had when designing the Wii.
The reason why I am linking to this article is because of the sales graph on the first page. I have seen this before, but I always failed to find it again when I wanted to talk to someone about it.
Just incase it gets pulled in the future here are the numbers:
NES 60 million sold
SNES 49 million sold
N64 32 million sold
GC 24 million sold
Sales with each new generation declines at an averages of 26% meaning that if the Wii follows this trend it will only sell approximately 18 million units over five years. As far as I can tell from searching Google not even the DS has achieved that number yet, so it's still a lot of machines. And even selling very well at the start of a lifecycle wont be enough to grantee that number of unit sales by the end of the lifecycle.
To get that number up consoles need Killer Apps which are traditionally made by first party developers. An easy way to think of the first part and third party developer model is that the first party development teams make games for people who don't own the console yet, where as third party developers make games for people who already own the console.
--Subjective opinions follow---
My problem here is that Nintendo is once again trying to get fans of their products to part with cash by buying games that they already own and none of the future games comming to the console that I have seen have interested me. If you pardon my very subjective opinion at this point I do not believe even that they have any Killer Apps in the works. Where as the 360 has had several titles this year like Saints Row, Dead Rising and coming titles like Gears of War, Viva Pinata that will act as a catalyst for gamers and none gamers to suddenly desire the console, run to the nearest shop and tell the shop owner that they desire to part with cash for a unit. I do not see this happening with the Wii as the most tantalising title Nintendo seems to have in the works at the moment is Rayman Raving Rabbids which from what I can tell is simply a party game. The new Zelda will probably be enough for Nintendo to sell 5 million Wii units without anybody first evaluating what they are buying, but I don't think it's looking good.
Then I have a big concern with the controller's need to be setup correctly. I know everybody keeps saying everything will be ok when you get one at home, but I haven't yet seen anybody demo a Wii console that has been properly configured, not at a presentation, behind the scenes looks at any titles or at presentations on the new controller to journalists that shows them how it works.
On the surface it simply seems very amateurish to demo a future product without taking the time to set it up properly, but that is what has been happening and I can't help but think there is a limitation with the controller that isn't being talked about, but yet will limit the designs of games that developers will make for the Wii.