I hope Nintendo goes all out for this next console. And there's little reason to think they shouldn't. Hardware costs have come down dramatically since 05-06 when Sony and MS released their HD consoles. Nintendo can easily make a console that is more powerful than 360 and PS3 and keep costs low... my guess is they probably wouldn't even mind taking a loss on each console sold (after all they can easily afford to with the commercial success of the Wii), if that means recapturing the core gamers and continuing to entice casuals to buy their new system.
As for MS/Sony, well they can continue their 10 year plan. MS beat Sony this gen largely because they released their console a year ahead of Sony. I think if nintendo releases this console a couple years ahead of MS/Sony, they are in a great position to move in for the kill.
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