Every kid I know want's either a smartphone or tablet. From my observation the only people playing consoles anymore are teenagers and adults that grew up with consoles many of which are increasingly shifting their attention to mobile. The younger kids have ditched their DSi for iTouches over the last two years and are playing casual and social games.
^^ this. So absolutely true. Kids under the age of 10 have almost no interest in consoles at all. The iPad with its plethora of freemium games gives them more to play with than a console. The goalposts have indeed moves and the console makers ad game makers targeting kids have to realize that. This is a fickle market.
Once it hits the fan, the only rational choice is to sweep it up, package it, and sell it as fertilizer.