This is a brilliant strategy by Nikon.
Now we've got 3 sizes to choose from: Nikon, 4/3, and APS-C. People will go Nikon for compactness or APS-C for quality, and 4/3 in the middle will lose out.
Longer term, sensor tech will improve, and lenses will get faster. They'll pass the quality bar for more potential customers with each iteration, and more people will forgo the advantage of larger sensors in favor of compactness.
All the while, they have a format that is cheaper to manufacture, so they can put the difference into other features, or just have higher margins and invest more in R&D.