well.. in business terms that's a "supply" problem == unable to meet customer demand (in that old supply vs demand equation where a change on one side creates a problem on the other side).
But yes, they thoroughly underestimated their impact on the market (much like the RX-7 Mazda and the Toyota Prius underestimated their market on release).
Not only does Nintendo have a "keep the games coming" problem, they have the additional issue of "what games make sense or actually innovate using a Wii wand?" I keep waiting for something like "Wii feet wands" so something like DDR or soccer might prove interesting.... (or Wii "wear" for that full body effect
).
Myself, I could probably be kept entertained for quite a while with just expansions to Swing Golf (courses, effects gear, etc)