What I mean is that sales of their hardware is based on their software being exclusive to their hardware. You buy a PlayStation OR Xbox to play, say, Metal Gear Solid V. But you buy a Wii U to play Mario, Zelda, etc. I'm not sure what the power of their hardware has to do with it.
It doesn't when you explain it that way. I tend to focus on the technical specs of a new piece of hardware when valuing it. Like you pointed out, Nintendo makes sure that most of their games are exclusive to their system, so the software does sell the hardware, even if it is beyond obsolete when it hits store shelves. Of course, the same would apply to any game system, even with the more up to date ones in terms of processing power. Of course, PC gamers would state that both the XBOX One and PS4 are obsolete pieces of hardware compared to a PC gaming rig. So, I guess it is all relative.