It seems like just yesterday I was in Elementary School, going over friends' houses and playing N64 all afternoon until my parents came to pick me up. Those were good times for gaming. Everybody had a Nintendo 64, and it was even something we would talk about in school all day. There was Zelda, Mario, Donkey Kong, Banjo Kazooie, and Goldeneye 64. That's all I really have to say. I mean, everybody and the mother was playing Ocarina of Time.
At this point in history, Nintendo was on top in the video game industry. After the NES, Super Nintendo, and now the N64, they seemed unstoppable! However, things have been downhill ever since. The Gamecube was a great console, but it just could not keep up with the Playstation 2. The Wii sold at a ridiculous rate when it was first released, but quickly fell off as Sony dominated international sales, while Microsoft easily won the United States. Now we have the Wii U...
At first glance, you can see that the Wii U isn't meant to out-power the other consoles, or show off it's graphical abilities. In fact, it is currently only slightly stronger than the Xbox 360 and PS3. When Microsoft and Sony release their new consoles this year, their processing power will prove to be incredibly superior over the Wii U. However, this isn't where Nintendo has failed.
Nintendo makes terrific games, some that people have been playing ever since their childhood almost twenty years ago. Franchises like Mario, Legend of Zelda, and Donkey Kong have huge fan bases. This is how Nintendo succeeds; by making great games rather than superior, powerful consoles.
With every Wii U sold, Nintendo loses a couple of dollars. They literally aren't making any money on their systems. This is a strategy they're using to make the system more affordable, and allow people to spend money on their popular franchises. The console is not making them money, but the games are. However, with the Wii U's launch, there weren't any great games to be found. We're still waiting on Pikmin, Super Smash Bros, a new Zelda, and other incredibly popular games. Right now, there is no good reason to buy a Wii U, and that's a problem. Nintendo failed miserably with their launch. You cannot release a console without great games to back it up, a lesson that Sony and Microsoft are now using to their advantage with their impressive launch lineup for both consoles.
Nintendo isn't making money on the Wii U, and in fact, there isn't even a great reason for them to be making a console at all. They do not have much third-party support, and they don't even have great first-party games to back the system's release right now. It would make a lot more sense for Nintendo to just release their games on other consoles, and stop making systems of their own. This may be a concept that is unimaginable for hardcore Nintendo fans, but it just makes more sense. There are plenty of people out there who would love to buy every Nintendo game that is released, but they don't see enough reason to buy another $350 console separately just to play those games. Microsoft and Sony have taken over an industry that Nintendo made popular, and the consumers are proving that. Xbox and Playstation are incredibly popular, and it would greatly benefit Nintendo if they decided to make games for these consoles. It doesn't make sense for them to lose money by selling a system of their own.
Right now, Nintendo is in a world of hurt. Traditional handheld games are going extinct due to the popularity of iPhone and Android games, and Microsoft and Sony have taken over the home console market. Nintendo could capitalize greatly by taking a step aside, and releasing their games for other systems. This would be the only way for them to make money right now, because they cannot continue on the path that they are on.