Yep, this exactly summarizes the problems the Wii U has faced. The Wii sold great because Nintendo was selling to a new market of more "casual gamers" in addition to its usual fans. The problem is, these people don't keep tabs on new gaming hardware. They mostly learned of the Wii through word of mouth, for which the console's name "Wii" was memorable and unique. From its first announcement, I could tell the new console's name was a mistake, since these more casual gamers will have difficulty differentiating it from the Wii. Even the console's logo looks pretty much identical to it's predecessor's, aside from the barely identifiable U shape to the upper right of it. To them, the new console is just some sort of overpriced touchscreen add-on for the machine they occasionally play bowling and party games on. The benefits of such a controller aren't exactly as easy to determine as those of the original motion controllers, so they are unsure of how exactly such a device will offer anything over what they already have. And for any of these casual gamers who did pick up the Wii U, they undoubtedly found it lacking in the game department. For a long time after launch, Wii Sports, the series that likely sold them the original console, was nowhere to be found. It took a year after the console's launch for Nintendo to release anything Wii sports related, and that only came in the form of two sports available for Wii Sports Club, where people are expected to buy or rent updated versions of the individual sports that were available in the original game, as they become available. So rather than having a pack-in Wii Sports title included with the console, these casual users are expected to figure out how to purchase them through Nintendo's online store.
Meanwhile, for those more familiar with gaming, the new console seems like a repeat of what the Wii had to offer them last generation. The hardware capabilities are much improved, but still only marginally better than what the prior generation of consoles from Sony and Microsoft had years ago. The controller is interesting, but there aren't really many games that make good use of it yet. And meanwhile, Nintendo remains a bit behind the other console makers in terms of non-gaming features. Many also recall the dearth of decent third-party games available for the Wii during its latter years, and suspect the same will happen with the Wii U, perhaps even sooner due to its slow initial sales. The only thing they expect to get out of it are Nintendo's core first-party games, and Nintendo hasn't shown them all that much on that front yet. They still haven't shown a new Zelda, Metroid, F-Zero, or Starfox. It's certainly possible Nintendo might turn this around over the course of the next year though.
Of course, the Wii U still could benefit from another price drop as well. The current pricing is closer to the Wii's launch price, but the console lacks momentum at this point. I suspect there will be another price drop at least by the next holiday season. A basic Wii U for $199 USD or $249 for the premium version with a pack-in title would be a much more attractive price point for both casual gamers and those looking to get one as a second console. Even if Nintendo is losing money on each console sold, they'll make that back on the inevitable sale of a couple Nintendo exclusives, and it would help build their install base to keep the third-party developers from abandoning them.