Nintendo has never really focused on hardware. The GC was comparatively powerful and it didn't yield them much, while the N64 was also fairly powerful but relied on carts. Really, the only time I recall them having both a comparatively strong console and a good amount of success was the Snes, and that was probably more a matter of timing than anything.
Heck, in handhelds they've never once had the more powerful hardware than their competitors. That's just not how they operate, and it makes sense as they don't want to absorb those losses per console sale that Sony and Microsoft have been willing to absorb for years. Microsoft still hasn't turned a profit on Xbox sales, after all, and that'd be a pretty terrible situation for Nintendo.
The way they currently operate, either they make a lot of money or tend not to lose much. It's safer, and it's one of the main reasons they're still here while companies that attempted your strategy (Atari, Sega) have long since left the market.