I could understand the $600 price tag; but was that the only hindering factor?
I think the other factors, aside from the really high price tag, is that the initial game line-up stinks, the hardware is a confusing mess for devs, there's no consistent online story (it's cool when reviews refer to it as a "ramshackle mess"), and there's
nothing compelling about the system.
The Wii, on the other hand, is something new and interesting - like the DS.
If you already have a 360, there's no reason to get a PS3.
In fact, if you go out and get a 360, there's still no reason to get a PS3.
But a Wii is entirely different from the other two systems - it's in its own class.
Nintendo is creating its own console markets. They've been doing fantastic work while becoming a boutique console seller.
In a way, Nintendo is turning into the Apple of the console world.
They're very smart - they know they don't need to challenge the 360 and PS3.
There's plenty of room to make money in this market by just doing something interesting. They might wind up with less overall dough coming in (although, from the sales numbers, I doubt that's going to happen), but they also know that less dough is fine when
you have less overhead.