They can. They just don't.
No question Nintendo has some advantages - their mascots are the icons of gaming, and very few IPs have that sort of fan base - of 1st party titles, only Halo/MasterChief can compete with Mario/Zelda (though Sony is trying).
They avoid competing with themselves (Nintendo one platformer, one racer, one adventure title, etc).
Nintendo understood the Wii before anyone else (by necessity) and so were in the best position to exploit it.
But what I think helps Nintendo more than anything else is that they are a game company, and have no pretensions of being anything else. The Wii was never a "gateway playform" like the 360 and PS3 are supposed to be. Their focus from the start has been on gamers, and they've spent a good part of the last decade trying to figure out how to make more gamers, rather than trying to get gamers to use their console to watch movies.
Finally, Nintendo is as all awesome as we like to think. ETernal Darkness sank like a rock. Metroid Prime 1-3 did very modest numbers. Pikmin has never been more than a niche title. Its really just a few of the aforementioned mascots that really drive the sales through the roof, and many companies have their own "killer" IPs that can stand toe to toe with Mariio and Link - Halo, Resident Evil, Madden, Gran Tourismo, Grand Theft Auto, Final Fantasy, etc.
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