Costing aboout half as much out of the chute didn't hurt, either.
Nintendo knew its market. What most people don’t realize is that the Wii is the way it is primarily because of business decisions. And looking at their sales, they made the right ones.
They realized that most people will not pay more than $250 for a game machine. They realized that it had be small to fit into people’s already crowded entertainment centers. They realized people wouldn’t stand for a loud machine. They also realized that the couch-bound button masher was a bad image in people’s minds about gaming. They also realized that people were not going to string ethernet cable to their living room to play a game online, so they included WiFi out of the box.
Put together all of these and you get the Wii. A small, inexpensive, fanless box that you have to stand up to play the included game.
Cost control requires innovation, and plenty of it!