> Always is a bit strong isn't it? Prior to the Wii their consoles tended to be similar to their contemporaries in processing power.

Yup, you could say Nintendo always thrived on underpowered (compared to competition) hardware.

  NES was twice less powerful than SMS;
  GameBoy didn't even have a color display;
  SNES vs SMD similarity as NES vs SMS;
  GBC was weaker than Neo Geo Pocket or WonderSwan;
  GBA just didn't have competition (although, if we count N-Gage...);
  Wii had hardware from previous generation;
  NDS was way worse in raw numbers that PSP;
  3DS analogically with PS Vita;
  Switch isn't even comparable to PS4/X1, let alone PS5/XSX;

What all of those Nintendo consoles have in common? Being their the most successful.

Whereas when Nintendo focused more on being on par or even surpassing competition in hardware power during 5th gen. (N64) and 6th gen. (GameCube), they didn't sold nearly as much as generations prior.

The exception to the pattern are Virtual Boy and Wii U. The former was sacrificed as "filler" (+ bad design), the later due to bad marketing (and naming) + poor decision on betting on "casuals".