It was Nintendo's way of keeping up with Xbox and PlayStation makers. their gamecube and Nintendo 64 were obselete, so they came out with a better gaming system. and, so far, it has kept them in the competition (though i think that they are ahead in the hand-held gaming industry. PSP is a close competitor, though)
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Wii Fit was made for those who cannot go to the gym (or afford to go to the gym), and prefer to stay at home. It's a healthy way to stay fit while not leaving the comfort of your home. Plus, the whole family can do it!
The Wii was created to introduce Video Games to casual gamers, or people who never played a video game before.