I'd argue that the situations are quite different Kolgar.
1) The Gameboy line has 10 years worth of games in its library. Do not underestimate the power of backwards compatibility. Why do you think every iteration of the Gameboy has sold like hotcakes?
It's because people know they can play anything from the current lineup to the original Tetris, no matter which gameboy they've got.
2) If the SNES was backward compatible with the NES, you can bet the Genesis wouldn't have done nearly as well. I think the same can be said if the N64 was backward compatible as well. The Playstation wouldn't have had a prayer.
3) Why did the PS2 do so well out of the gate even though there were a ton of crappy games at launch? Because it was backward compatible. If they had started fresh, the PS2 would most certainly not have done nearly as well as it has.
With 10 years worth of games in the Gameboy lineup, no one will challenge Nintendo in that market. The vast amount of support for the Gameboy, and the amount of handhelds sold, just can't be overcome imo.
That's why I believe the PS3, no matter what Microsoft or Nintendo do in the next round, will again be the market leader, because it will no doubt be backward compatible with the PS2 and PS1.
Nintendo realized it quite handily with their Gameboy system. Had they realized it with the SNES and N64, they'd more than likely be the market leader today, by far.