Clearly, you don't remember the Gamecube era. Nintendo's been down this road before. They'll be fine. They don't NEED to be #1 in order to continue making the games we all love to play. As long as they're making money, we should all take a deep breath and relax.

A lot of people apparently don't remember the GBA-GCN era. The GBA was a monster seller in North America, in fact I think it was the fastest selling game platform in North America ever, faster than the PS2, PS4, DS, or Wii. 

The GameCube sold ok in North America too, North America was its strongest market, Japan and Europe is the reason GCN didn't hit 30+ million. 

Iwata and his board IMO don't understand the North American market and never really have. They got lucky by cashing in on a few casual fads before Apple/Android/MS Kinect moved in on the market to provide competetion. Even on the Wii, after Wii Fit in 2008, they weren't really able to find another casual fad to latch onto. Wii Music failed to be a big hit, Nintendo Land wasn't, Rhythm Heaven wasn't, Tomodachi Collection has done OK in North America but its no Brain Training/Nintendogs. 

And why would the nintendo magic be lost if they did those things? All those things are internal software and hardware choices. Not game quality.

Nintendo missed the boat with low-budget/indie Western games too.

Look at games like Minecraft, Angry Birds, Candy Crush, Farmville, Plants Vs. Zombies breaking out in the West to become big hits ... these aren't "dudebros" games, but Nintendo doesn't engage with this community either. 

Unfortunately for Nintendo these games are killing them in the West, they are taking the kids and casual market away. Even amiibo ... they are late to this party after Skylanders broke out years ago. 

You don't get to cherry pick artistic expression.  Every artist chooses an area to focus on and there aren't enough resources to improve in all things.  The WiiU is a drastic improvement in online functionality over its predecessor.  Now...I understand that business is not art, but the ideas remain the same.  Now seriously...since you brought it up...do you think if all those things were changed that Nintendo's circumstances would be different right now?  Nintendo is like that dorky kid in junior high that even the dorky kids made fun of so they'd feel good about themselves.  And every once in a while that ultra dorky kid becomes king for a day (like what happened with the Wii), but you can't just tell that kid to get some cool sneakers and a nice jacket and everyone will love him.  The dork is in his DNA...and you either love it or hate it...respect it, or fear it.  All of this commentary regarding Nintendo's position in the console market isn't designed to help the kid...it's designed to bring him down even further.  It's bully mentality at its most basic.

While I agree with some of that, it's not really entirely accurate. Nintendo did a fair job of tailoring games to the West in the 1990s while still making unique games, they are the ones who have regressed in this regard. 

I think of it more of like yes Nintendo is nice guy/dorky guy, but the casual-fad era was like them magically hitting pay dirt by catching the attention of the hottest girl in the club. She even adds him to her Facebook. Nintendo is over the moon, imagine Nintendo with a girl that hot as his girlfriend! Even Sony/MS are jealous and can't believe it.

But really they were never going to have a long term relationship. That type of girl isn't looking to get locked into a long term relationship with a guy who at heart is really a dork. She had fun with him and added him to her Facebook to be nice. Nintendo is the poor sap that goes back to the nightclub the following week, wearing the same clothes, trying to do the exact same thing he did the week before, but is punched in the gut when he sees "hot girl" dancing/chatting up some new guy. 

Exactly...but changing his clothes wasn't going to work either.  He's just not that guy.  He really shouldn't even be trying the night club.  He needs to go to the library and find a cute shy girl who will respect him and realize his potential.  Attempting to cater to the Sony/MS crowd is like trying to go back into that nightclub again.  It will never be his scene. Where he really went wrong was he tried to hit it off with the retirement crowd, not realizing that they don't have the stamina for more than one session, if you know what I mean.  They're just too old to be hardcore at this point.  

The Wii was partly successful because there were a lot of hardcore guys who thought getting their GF's a Wii would get them into hardcore gaming.  Those GF's have gone on to tablets, phones, facebook.  So there really isn't much Nintendo can do to change this tide.  It's a bro culture thing.  It's a bully culture thing.  It's a sports games and shooter thing.  And I really don't care whether Nintendo sells 30 million units, as long as they continue to make games that appeal to my sensibilities.  I don't need an amazing online community...I prefer local multiplayer so I can interact with my real friends.  It's one of the reasons I like gaming.  Their efforts at DLC are inspired and fair to the consumer.  The diversity of their games catalogue is impressive, considering that really they're the only ones making games for the system.  All this complaining and shit-talking against them as a company is more often than not just taunting and not really analysis.

ur right, North America is where Nintendo is really hurting compared to GBA/GC (Nintendo's previously worst selling handheld/console). Here is how 3DS/Wii U compare to them according to Vgchartz platform totals chart.

GC NA-12.55m, GC Other-9.19m
Wii U NA-3.09m, Wii U Other-4.12m

GBA NA-40.39m, GBA Other-41.12m
3DS NA-13.97m, 3DS Other-31.73m

Outside of North America, Wii U & 3DS will at least come close to GC & GBA but in America its currently not looking too good.

I think a large part of the problem, and Nintendo has even somewhat expressed this as well, is that with the rise of smart phones/tablets and free/99¢ games the market for a $200-300 piece of hardware with $40-60 software aimed primarily at kids/families is shrinking in America.

they are just kinda stuck in the middle, kids/families/casuals want to play these cheap, simple games that provide short yet fun bursts of gameplay on smart devices they already own and the hardcore teen/adult male demographic wants to play the big AAA western developed games on PS/Xbox/PC.

going forward, if Nintendo really wants to continue the family-friendly approach they need to find a way to provide less expensive hardware/software. I have talked about this many times recently but this is a perfect example of why Nintendo needs to unify their handhelds & consoles.

with both pieces of hardware having the same architecture/operating system and similar specs with all software being released on both devices, Nintendo can greatly reduce R&D costs and have less expensive hardware/software and hopefully regain at least some of their target audience in America.

Actually the "hot girl" in my analogy is the casual audience. She's the mythical "unattainable" girl, when Nintendo looked to have her, even MS/Sony was flabbergasted. Nintendo was the dorky guy hoping to just maybe land a decent girl, but somehow by having fun and letting his hair down he caught the attention of the hot girl. But she's way out of his league really and reality came to life in a hurry. "Hot girl" has a million things going on in her life, you have to constantly keep her attention, and Nintendo as "dorky guy" just wasn't cut out for that. 

Nintendo has more in common with Sony/MS, they just do so under a family friendly veneer whereas Sony/MS target the 18-25 year old gamer first and address the other audiences secondly. But even Iwata (or was it Miymaoto?) admitted this recently saying with Sony/MS he can at least understand those companies because they basically play by the same rules as Nintendo. 

But the iOS/Android ecosystem doesn't play by Nintendo's rules. At all. Nintendo's never faced a competitor like that before. I think they are just profoundly confused as to what's happening around them. 

The iOS/Android system is based on crappy games that crash all the time that you get for "free" after spending $100/month subscription to use the device. So many sectors in this economy have taken a hit because of the architecture available in smart phones. Think anyone buys a calculator anymore...or a flashlight...or porn.

To ask Nintendo to do what MS/Sony are doing to gain back an audience that they lost to Apple, Samsung, Google, etc, is to not understand the market Nintendo finds themselves in. I just don't think Nintendo will ever win back the "hardcore" crowd. They hate the kiddy games, and they hate when Nintendo tries to make something that isn't kiddy. That's my only point in all of this: Nintendo's problems are not necessarily of their own making. And I'd rather not lose a company to a generic status quo just to remain viable. As long as Nintendo can continue to create a device that ultimately will be profitable and thus ensure their future as a games developer, I won't mind that the system isn't as powerful as what MS/Sony continue to offer.

I personally love the graphics on the WiiU. Graphically there's a texture about most of the games that looks even more realistic than many of the "realistic" games that audiences currently enjoy. Maybe it's because I didn't jump in to an HD console last generation or because I don't have a high end PC, but it's enough for me. If I'm playing on a gimped system, it's hard for me to tell.