But the people who are most likely to buy it day one just did, on Kickstarter. Ouya just crowdsourced the customer, the product message, and the marketplace.
"The question becomes bigger than, 'How does this console compete with the Xbox?' (which is already a HUGE question), it becomes 'How doe this console compete with Xbox Live?'."
How does Steam compete with Games for Windows or EA Origin if it is orders of magnitude smaller than both? How does the iPod Touch and iPhone compete with (and dominate) the dedicated gaming devices PSP/Vita and 3DS? How did the Wii compete with the 360 and PS3?
Smaller players with cheaper devices that require no initial player investment or outlay can be adopted en masse. Think about where HTC or Huawei or LG or Vizio were before they became near the tops worldwide in consumer electronics. Vizio wasn't even on the radar 10 years ago, now they are the #1 maker of TVs in the largest market in the world.