Specifically, it's that they do stuff qualitatively that their competitors don't, to the point where they're not so much competing as they are the sole player in a brand new market.

I remember when the seventh generation came out, Microsoft did Nintendo's PR work for them by telling people that they can buy both a 360 and a Wii for the price of a PS3. That's right, they got Microsoft of all people to tell consumers to buy a Wii! Why did MS do it? Because the Wii is so qualitatively different from the 360 that they weren't directly competing.

Nintendo set things up such that nobody would ever ask "should I get a 360 or a Wii?" the way people would ask "should I get a 360 or a PS3?". Instead, they made it so a large amount of gamers wanted to get both a "normal" console and a Wii in the same way that people own both a console and a PC. On top of that, they also attracted people who would never buy a normal console because normal consoles don't appeal to them at all.