Wii innovated and became better in an area that happened to matter more: player interaction with the console. I don't think it was obvious in foresight that this was so important.
Exactly. That last line was the most glaring with the whole article because it was the Nintendo GUI that gave them their current standing. Their "vision" emerged from their greatest weakness - the inability to compete with the biggest boys in playing the same game. So instead they changed the rules by innovating. They must have known they were aiming for a different slice of the market but without appreciating how big it could be.
Perhaps not to us, however Nintendo bet the farm on this vision. The Wii is weaker graphically and in online connectivity than its competitors. It also had the disadvantage of following the (relatively) disappointing Gamecube. Had the interface failed Nintendo could have ended up like Sega: left to publish games for other consoles.