Ballsy move. It may not please the spec junkies, but if this was madated through a business vision, rather than a lack of resources and ability (hardly), I can only think that Nintendo may have seen a new tomorrow. Let's hope they don't completely alienate their current fans while making the rest of the World ones.
Personally, I have a difficult time imagining the price as the sticking point for the market. Rather, I think these devices have to become more multi-purpose to find their way into every home. In a sense, I think it has to become "and they play games.." rather than "they only play games." To me, the obvious is Internet/E-mail, movies and music, with Internet being a very broad subject. To be very clear, I don't mean multi-player online games. I mean it as a universal entertainment and information device. In this sense, I think Kutaragi has it right (if he ever really said it, I have only read it on here) that the Playstation will seek to replace the PC. Perhaps not for your word processor and spreadsheet, but certainly as your Internet communication device and forget about buying stand-alone DVD players.
It follows, naturally, that HDTV is a key component in such an evolution. Just try reading a web page on a SDTV and you will see why.
PS. In this sense, I think Apple may be well suited to compete. They would not need the most powerful gaming system, but they seem to know how to do "the rest".
