The problem with Nintendo is that it never realy recovered from the N64 stigma. Â In Japan the system bombed big time. Â And here in the states it was the "familiy friendly" system, which mens that for a while it only had kid games. Â The GC is hurting most from not haveing network capabilites or DVD capiblites. even though its games are DVD's, they're to small. Â So most colledge age students didn't buy one when they could get a PS2 or XBox and get a DVD movie player.
Even though Sega dumping it's console part is the smartest thing that companies ever done, don't expect Nintendo to follow suite. Â The Dreamcast was the only system that was a comercial sucess anywhere for sega. Â And it was still did very poor by nintendo,SONY standards. Â The Genisus, contray to popular belief, bombed big. Â Sega had only sold several thousand of them in Japan which at the time was the real test of a system.
As for the new Nintendo system being backweards compatible, if it's DVD then there won't be much of a problem. You see how SONY does it isn't by makeing the programming language simular they have emulation software installed on the PS2. Much like Tage's PC;)