Saying that Zelda would be a text adventure if Nintendo didn't care about graphics is quite the exaggeration. They do the best with what they got, of course they want their games to look as good as they can, any developer works for the same thing. That doesn't mean that they care about graphics though because frankly, they are going to seem pretty dated rather soon.
Also how graphically impressive those tech demos are is subjective as it's been discussed many times before. They looked nice, but I wouldn't really call them impressive for a "next gen" platform. Go ahead and call me a troll, but all I'm doing is trying to put things into perspective.
This is a contradiction. Super Mario Galaxy 1/2, for example, are highly impressive. These games are alot closer to an xbox 360 game graphically than anyone thought the wii could do. Nintendo outdone themself on this one. Yes, it dosent look as good as an xbopx 360 game but its very impressive.
Or a more radical example:
if my digital watch could run games with N64 graphics, wouldn that be impressive?
Issues surrounding the industry have more to do than just the tech race. If you think Nintendo now entering the HD-era is doing anything to help these issues then you're sadly mistaken.
Not directly a response to that sentence,
but one thing while Nintendo CAN'T allow themselves to not making money for a generation is because of the investors.
Nintendo only has a Handheld and a stationary gaming console. When the dont make money, the investors wont get money. And you dont want to make your investors mad.
Microsoft and Sony have ALOT of other stuff besides consoles. When they make losses in the gaming department, but can compensate it with the earnings from a department that did well, ther investors will be pleased anyhow.
This gives Sony and Microsoft a much bigger opportunity to go "balls to the walls" on the hardware side