The 22 Cans founder said that he found it confusing switching between the GamePad and TV screen, telling GamesIndustry International that it's not as impressive as the iPad or Kindle Fire.
"I've played the experience, I've played Nintendo Land, I've played ZombiU, and they're good," he said.
"I find holding the device in my hand - looking up at the screen and looking down at the device - slightly confusing as a consumer. It's good, but it's not great.
"And we really need these new pieces of hardware to be great in today's world, because the competition is not just consoles anymore.
"The competition is everything, all the technology. When you're holding a Kindle Fire or an iPad in your hand, it's just amazing technology. It really is. It's expensive, but it's amazing technology. And people like Nintendo, Sony and Microsoft need to match that.
"They need to match that in my mind, and exceed it. And I'm not sure the Wii U really did that."
Molyneux is, however, excited about the system's potential for asymmetrical gameplay, and expressed his respect for Nintendo, which he believes created the industry.
"I can remember everybody in the industry laughing and giggling about how stupid the Wii was, what a stupid name it was, and who would want motion control," he said.
"And then it went on to sell what, 60, 70 million copies? It got people who never considered computer games to play them."
> Wii U: Everything you need to know about Nintendo's new console
Gallery - view images of the Wii U's launch lineup:
Copyright: NintendoAvailable now in Europe and North America, the Wii U comes in a basic and premium edition, as well as a ZombiU bundle exclusively in Europe.
A day-one system update is needed to access its online features, including Miiverse, Wii U Chat, a dedicated Internet Browser and the Nintendo eShop.
The eShop will launch with five games, as well as two demos. To celebrate the launch of the console, Nintendo will discount a number of eShop games for a limited period of time.
> Read Digital Spy's New Super Mario Bros U review
> 'Nintendo Land', 'New Super Mario Bros U' review round-up