Well consider the amount of technology that goes into the developing these consoles.
As an example (and I've been following the development of this console closely) a Sony PlayStation 3.
A majority if people want faster, better consoles that do more and more all the time.
A PS3 has a 7-cell processor to churn out very near photo-realistic graphics. This took years to develop (by IBM I think)
Also has a Blu-Ray DVD player. This on it's own costs £800.
Sony are losing about £200 for each console they sell.
Compare this to a Nintendo Wii.
Nintendo have taken a diffrent route. They have concentrated on playability rather than in your face graphics.
Processing wise, it's not much more powerful then the GameCube, so it's really old technology with the added bonus of the motion sensing.