Okay, this is a serious question and it is not directed towards a single Nintendo home console, but rather their entire home console business. How can they come out on top consistently over their competitors at the end of a given generation?

There are two possibilities that come up, which would be the following:

-Make a console with an "innovation" (or gimmick as many like to call it), sacrificing graphical fidelity: An example of this is the Wii and it was a resounding success. But the problem with this is that Nintendo were not able to replicate its success with the Wii U, which tried the exact same thing with the tablet controller. This led many to believe that the Wii was simply a one time lucky break for Nintendo, a "right place at the right time" console.

-Make a console that is on par with the competitors in terms of power, sacrificing gimmicks: This worked for them back during the SNES days, but again they were not able to replicate this success with the N64 and Gamecube, which were both strong but lagged behind in sales compared to the PS consoles.

On top of this, Nintendo has absolutely abysmal 3rd party support which make up the majority of a console's library of games. It should be clear however that every gen there is a handful of Nintendo faithfuls who will buy their home console no matter what route Nintendo choose to take, or the amount of 3rd party support they get, perhaps more than any other console manufacturer. But these people are not enough to make Nintendo win the console race.

So the question is, what strategies can Nintendo employ to win when neither putting in gimmicks nor making the strongest console guarantee them a victory in the console race?

 I think the issue with "innovation" is what they might think is innovative might not be the case for other people, so for example, the wii was innovative in their eyes and so was ours so us and our pets bought the wii but the wiiU on the other hand, even though they thought it was innovative, we didn't think the same which is why its not selling well. So innovation is always a risk but comes high reward if its successful

Now the second one is obviously the safer route but the issue always is that if something is not on par, you will get highly criticized for it! For example, the X1 is not on par with the ps4 which is one of the reasons its not selling as well as it might have if it was on par but the third party will be a big bonus either way so I guess its fair. The other thing is that they did something like this with the gamecube so the only way this will work is if the architecture is the same as its competitors (correct me if I am know cause I believe it was different between the GC and ps2)

The console race is created by the fans...it doesn't matter to Nintendo unless they make money

With that said, I've voiced my support for a handheld/console hybrid before. Nintendo no longer has the capacity to maintain both a handheld and a home console by themselves and they obviously don't have the greatest luck with 3rd parties. This would allow a steadier stream of games as well as appealing to two markets simultaneously.

PS: Your sig makes it very difficult to concentrate Mr. Pirate

Fire iwata. Simple as that.

The Wii wasn't a lucky thing, it was well advertised and even appealed to non regular gamers. The WiiU offers the same as the Wii but with a tablet, those older people that bought the Wii doesn't have the same appeal as the Wii and not as well advertised and is more expensive.
At the same time if they lower the price to 250 you might see a boom in sales just like when they did it with the 3DS, they have the games for the WiiU and the graphics are beautiful, the gamepad is a great thing but not appealing to older non tech oriented people, not saying those guys were the main consumers of the Wii here.

A strategy Nintendo can embrace is thinking critically about their products.

It's not just a numbers game. The Wii U was a bad idea, and they allowed it to become a reality. However it happened, they failed to properly assess their market, and they need to address how that happened.

Its ok Mr. Sundin, I know that Pokemon is quite distracting so just wait till the end of the month and I will replace it with something better!

I didn't see the Pokemon until you said something...is that bad?

They have to go the Wii innovation route becasue as we can see they cant compete with Sony or MS on their own terms. Problem is you can get a Wii U situation where your innovative idea...nobody cares about. Its either do real good or real bad.

Yeah, because they were doing so great before he took over................................