Well that definition doesn't fit platform that is looking to sell close to 10 million units. That would mean that 1 out of 5 households in Japan would have PS4 (Japan having about 50 million households). That is not ''small specialized section'' of population.
Supposing that it does make it to 10 million units sold before a replacement comes along, I still think it makes it a popular product among it's niche. In this case gamers.
Laserdisc players were in 10% of Japanese homes in the 90s. (About where the PS4 is right now). You will find no one claiming that the format was not niche.
I am not sure why niche suddenly became a bad word. We are NeoGaf we are a niche community. Most of my favorite systems over the years were also niche.
However if the word is putting people off, can we agree to "not a mainstream hit". I can live with that.