Well a few counter arguments...
A) Sony had vision, when Nintendo screwed up. The original Playstation was a joint venture between Sony and Nintendo. That was until Nintendo's prez of the time, was asked by the press about using a disc based system. And he said that Nintendo would never do that. Nintendo then promptly dropped Sony like a bad habit. However, Hell hath no fury like a tech company scorned. Sony wen off on their own, finished the PS1 with a disc system, and then promptly schooled Nintendo and Sega., with games that would cost a fraction to produce, compared to their cart swinging counterparts. MS, yeah they were bandwagon hoppers though
Although I think you're telling me that Sony was in a joint venture, I seem to recall the PS1 still post-dated the NES, and you even say they were hand-in-hand(-in-joint) with...Nintendo. But if the idea of the disc-basing was a Sony "innovation" for a console system, I guess I can go there.
B)Spec for spec, the hardware inside a dedicated console would make your desktop cry and whimper if they met in a dark alley. And Sony is nice enough to allow for the addition of whatever operating system you like, without having to mod, or void warranty line 1. While it doesn't run as smoothly as one might want just yet, Sony fully endorses the idea of Linux flavors being put onto a PS3. So for $500, some technical knowhow and gumption, you can have a home computer out of your PS3, with hi test graphics, bluetooth, USB 2 ports galore, HDMI ports, and a blu-ray drive. Oh and if you don't like it, wiping it back to the beginning is a 3 step process outlined in the Sony user manual.
My desktop graphics aren't CGA anymore, either. It took sooo long for console system graphics to be anything more than SUCKY--little blocky sprites moving in front of a poorly rendered background. And computer GPU cards are still driving the leading edge of that technology. I'm just not convinced that console system graphics are beating up even my mid-range graphics laptop. And turning a PS3 into a Linux box just makes it a weak Linux box no matter how you slice it.
If you want to know how Nintendo and Sega succeeded though...the answer come in 3 parts. And this is not speculation here, as VG history is a hobby of mine.
This is where it gets interesting...
Part one, they made games that captured the arcade feel. They made games that felt just like they did in the arcade. Of course that forced the arcade machines to upgrade, and they just never upgraded fast enough, and at efficient costs. Why does a kid need to leave home to go to a seedy mall, to bounce on the head of goombas and koopas, when he can do it in the safety of his living room?
Okay, so Atari and Mattel didn't get arcade quality in their home consoles. But ColecoVision did. And even it failed. (Although that may have more to do with their investment in Adam, and the rest of the industry tanking just pulling it down hard in spite of the exceptional quality of its arcade game reproductions.)
Here in the middle we get to my original point: ColecoVision did a GREAT job of bringing arcade-quality games into the home. It failed. But it failed at a time when the Atari console market was being flooded with a ton of crap. (When I said it was Activision's fault I wasn't kidding. "Winning" the right to make games for the Atari console opened the floodgates for anything and everything...hoping to cash in on the booming console market. And they sunk it under the collective weight of their own inferior product.)
Part 2 they brought games to the home that were concept that no one had seen before. The greatest example of this being the ever loving Legend of Zelda. Zelda was easily the "World of Warcraft" of its day, in terms of bringing in new players to the video gaming markets. Then we got the beginnings of the Final Fantasy, Dragon Quest, and Phantasy Star series, which really started the video RPG market up.
I'm not sure I agree with the premise here. 1: a good game is a good game. 2: most of the good concepts were being developed for arcade consoles before being cartridge-ROM packaged for the home console.
Even with the plethora of different GPUs and chipsets and controllers et al, running a game on a PC is a matter of plugging in the CD/DVD/HD-DVD/Blu Ray, getting the install to run all the way through with out incident. I truly believe that (except in a few instances) the fps shouldn't need ot be tweaked up; the install routine should be able to measure the rate accurately, and tweak its own program's .INI to optimize its display.
Part 3 is simple human desire for simplification. At the time, personal computing was still mired mostly in its DOS 6.11 and Windows 3.11 days. Ask yourself, reasonably, if you were the average kid, and could get all you wanted out of plugging in a cart, and turning on the power to a system, versus continually having to tweak your memory settings through .bat files, and understanding the guts of the thing you're tweaking, such as IRQ settings for sound, et al, which would you choose. See yeah there were some massively great titles coming out of Sierra, and LucasArts, among other good publishers. But the technical know how to get them to operate on a PC was a higher curve, and Apple, gaming wise, had its thumb up its ass and was rotating.
I was an above average guy in his 20s. The NES seemed too expensive for just a gaming box. My PC was only about twice its cost, and I could do so much more with it...the console just didn't seem like a viable investment (and as console prices went up and PC prices dropped, the differential has only widened). In PC-gaming's infancy, it took a bit of effort to tune the DOS/Win box so that it would game, or it took a dedicated boot floppy, but once you got there, the games were boot-and-play (at least the ones I played were). And a computer monitor delivered sharper graphics resolution than the interlaced signal fed from a console to the plain old television to which its RF-modulator was hooked. Yes, it's simpler to just plug in a cart and go; and adding gaming gear to a PC is about half the cost of a console itself (but that added cost can also be spent on those spiffy fancy controllers and stuff for a console, as well); but the PC just returns more value for its investment. On the other hand, the pre-teens can be trusted to not screw up a console box in a way they can't be trusted to screw around with the family computer. Though "Dad" can still come home to find a half a peanut butter sandwich in the optical drive of the Genesis.
Oh, and Paul...you missed the Vectrex.(still trying to figure how to connect mine to the Matrix without having to have Gadget, do a wiring hack)

lol...line vector graphics in a box about the size of a Mac classic. I remember. I didn't have one. But I used to like Star Castle in the arcades, and the Vectrex was the only box for the home that did it right.
Hmmm...Asteroids, Space War and Battlezone. Then Tempest. What other vector graphics arcade games were there?