I think the 'Wii U' is onto something: we're seeing game studios spend increasingly larger budgets on creating high-resolution graphical assets for their game, including textures, shadows, reflection-maps, etc; they are increasing the graphical quality whilst neglecting the other aspects of games.
Nintendo's machine is certainly slow when compared to a PC or the latest console offerings from Microsoft and Sony, but as a gaming platform it can run enough to produce fun and interesting games, and I would not count it out yet. One of the bigger problems with it, which has very little to do with the hardware specifications, is its large touch-screen controller.
Because it's mandatory and none of the other consoles use these, developers are essentially writing code that's only going to be used on one machine.
Also, the notion of backwards compatibility has hung around since Microsoft and Sony both told us we'd have no luck in that respect. But consider the games that the 'Wii U' can run: It supports Wii, Game Cube, Nintendo 64 games, and SNES, NES, Neo Geo and SEGA Master System titles! The unfortunate thing is that these cannot be loaded via their original cartridges, but instead must be purchased via their 'Nintendo Network'. The console runs them on a virtual machine.
Now, I'm sure there will be home-brew emulators available for both the Xbox and PlayStation consoles, but these Nintendo games are official: the company is basically looking backwards and offering up both their pre-existing game libraries and those of other classic consoles. It's a clever exercise in nostalgia, which we all know is worth a lot of money.
In short, good games were made for the Nintendo 64 and SNES, which had a fraction of the Wii U hardware capabilities, and so it's only under-powered when you consider third-party ports. That, plus the touch-screen controller, makes Nintendo an unlikely contender for game studios wanting to release their games onto numerous platforms, as the PlayStation 4 and Xbox One offer more consistently-comparable hardware specifications, and thus you'll likely see the two systems sharing multiple different games.
Nintendo, on the other hand, will have to rely on their own first-party developments: Mario, Zelda, Metroid, Pokemon, Smash Bros and so-on. It's quite an exciting time.
Microsoft recently unveiled a new graphics technology that I'm very excited about: when you're texturing a large mesh, you typically need the texture to remain in memory. This is what mip-mapping is good for, because you can use lower-quality textures to cover a large area and reserve the expensive high-resolution textures for parts of a mesh that are more visible to the player. But now, with their 'Graphine' tiled textures, you can basically only load parts of a huge texture into memory, effectively getting high-quality high-resolution textures for about 16MB.
So, the primary reason why consoles (and gaming computers) have so much RAM is for textures. They are huge arrays of data, often gigabytes large for something with a lot of detail. Now you don't need to use all of that RAM, theoretically (I SAID THEORETICALLY!) and that means, well, good news! Of course, it requires DirectX 11.2, which means you can't run it unless you're using Windows 8.1 or an Xbox One...
But anyway, the Wii U was built for simple games without all of the graphical bells and whistles that modern gaming strives to provide; my theory is that Nintendo has decided against investing millions into almost-negligible graphical upgrades and, instead, wishes to compete in the arena of gameplay, which is incredibly wise, as games are only going to swallow more and more money as graphical quality increases and we can have all manner of beautiful lighting effects. This, of course, means less time for story, gameplay and engaging characters, but at least the dull, lifeless characters will be incredibly well-lit on the Xbox One! Heheh...
