[nemothekid]

If Apple is competing with Tetris, then Nintendo/Sony/Xbox won't have to worry about them. The people in that space are Smart TVs, Rokus, and Apple TVs, which already exist and aren't eating Nintendo's lunch.

If your console cannot play Call of Duty and Mario like the big boys, you aren't really competing in the same space, and as long as Mario and CoD are popular, your average person will simply just buy the iDevice and a Nintendo. Now if the Nintendo has the advantage of doing everything the iDevice can do, most people will simply opt to buy the Nintendo, especially if they are being sold at the same price.

[theevocater]

Think about the long term though. Apple has already convinced millions of people to put the AppleTV in their homes. With a simple update they could enable iDevices and an App Store to allow developers to do crazy stuff. Then at next iteration they unveil offerings more tuned to hardcore gamers. They liked the first one, now they want more. Apple is already deep in the gaming market, they have the patience.

So yeah at first Apple will compete with on delivering simpler game experience like Angry Birds or Space Team or Letterpress. But so what? People love those! Don't forget that "hardcore" gamers are no longer the focus here, other markets are much bigger. Apple can wait to focus on bigger titles.

[nemothekid]

What you are describing has already happened though, just the other way round. Nintendo convinced 100 million people to put hardware in their homes, and then with a simple update included Netflix. However just because people liked the first one, doesn't mean they would want more. The Wii U is selling as well.