While I can get behind the HD (since most people have HD TVs at this point) and even better Wiimote motion controls, the problem with the rest of that argument is that it would of driven up the cost of the system needlessly by adding that extra hardware needed for Gamecube compatibility and paying licensing fees to Sony for blu-ray. Nintendo wanted to keep the cost down to maximize profit, especially since most people already have alternative means for those features (standalone DVD/blu-ray players, PS3 with blu-ray, a Gamecube, original Wii with Gamecube compatibility, etc). Unlike Nintendo's systems, Microsoft and Sony's systems (which are already being sold at a substantially more expensive price than Nintendo systems to begin with) are actually being sold at a greater loss. If they were being sold at their actual retail value they would be closer to the $600 to $800 price range. In fact, with as long as the PS3 and Xbox 360 systems have been on the market, they are only just recently on the cusp of seeing a profit. The Wii U system on the other hand, while also being sold at a loss and having dismal sales since its launch, is already in the black by some reports. The same likely cant be said of the upcoming PS4 and new Xbox until several years have passed. For the record though, Gamecube hasn't been entirely forgotten about by Nintendo for the Wii U. The Gamecube (like the NES, SNES, N64 and other company's previous systems) is supposed to be eventually available to some extent on the Virtual Console.I think going to HD, allowing the Wii 2 to play blu-rays, continuing to offer full backward compatibility, and introducing a better WiiMote would've been the way to go, and would've been what the market preferred.
Sony and Microsoft's new systems are also either already confirmed (PS4) or rumored (next Xbox) to be jumping on the "touch craze" to some extent like the Wii U. Sony's PS4 "duelshock 4" controller will have a touch pad (similar to a laptop's touch pad) on it. Sony also recently took out a patent for a "touch screen" game controller similar to the Wii U's touch screen controller. The new Xbox is also rumored to have a touch pad on it's controller. The new systems are also going to continue to support the motion functions of their predecessors. The PS4 has PS move compatibility. The new Xbox system is rumored to come bundled with an improved Kinect. Microsoft is also working on a project known as IllumiRoom. By combining a Kinect camera and a projector, IllumiRoom turns the area around your television into a game screen. The Kinect captures the appearance and geometry of the room, and then it uses this data to adapt the extra visuals that are projected against the wall and furniture around your TV.Even Sony and Microsoft tried to jump on the craze with the Move and Kinect. The Move I have not tried (and it looks silly), and Kinect is the buggiest piece of crap I've ever seen and it's tough to see why Microsoft didn't dump it within a few months. The WiiMote worked quite well, and the WiiMote Plus even better. Why not get better at what people want, and other companies can't come close to matching you on?