10 worst decisions, hm? I'll be a bit different and approach it from the business side of things... I can only think of 9 things that have had a negative impact on their business in the past or that probably will have a negative impact in the near future.
9. Their current anti-cheating crusades (such as locking certain save files to memory cards/Wii internal memory and trying to break cheat device support with each firmware update). Like most of their crusades against the players, it's just hurting their public image and making their long-time users irritated with them. Hopefully they'll catch on eventually and ease up.
8. The anti-emulation crusades of the late 1990s and early 2000s. One of Nintendo's most pointless efforts was to squash emulation, which ultimately failed horribly. However, they did learn from this and devised both the NES Classics series for GBA and the Virtual Console for Wii.
7. The design philosophy behind the N64. The critical flaw in the philosophy was not that Miyamoto was given free reign to design the system around one game. The key flaw was that they did not ever stop and ask themselves "will the user benefit from this decision?". The focus on the product over the consumer was the big mistake that short-changed the Nintendo 64. Instead of designing a system around the user's needs, they designed it around the needs of 3D gaming, and just assumed that the player would adapt to their vision of 3D gaming with it.
6. Competing when they should have been innovating. This was an ongoing theme for Nintendo from about 1991 on to 2004, and it did them a lot of harm. Their focus on dealing with the issue of their fellow hardware manufacturers instead of on their products being something that consumers wanted over those other manufacturers without being told they wanted it was not a good business move at all.
5. Business deals with other electronics companies. Both Phillips and Sony approached Nintendo about developing CD-based games, and Nintendo didn't have the sense to say no to either (at first, anyway; they did say no to both eventually, though not before the workings of a deal in Sony's case and an actual deal in Phillips' case came into being). The Phillips deal was a dead-end, and the Sony deal led to the PlayStation, which did more damage to Nintendo than anything Sega ever devised.
4. Their focus on expansions to the main hardware to enhance capabilities. The Famicom Disk System, N64DD, and N64 RAM Expansion Pack were all good examples of this. By developing additional systems which acted as a stopgap to correct shortcomings of the system, they made a niche market for those products which was never able to come into any sort of fruition. And in the case of the FDS and N64DD, they were rendered obsolete by larger cartridge sizes.
3. The GameCube being "better" than the PS2 instead of different. This was a pretty big slip-up, especially given everything they'd learned about the industry by then. The GameCube had a lot of the same flaws in design as the N64, but its key flaw was most certainly that it did not try to differentiate itself in any meaningful way from the PS2, save in terms of graphical capabilities.
2. Gunpei Yokoi's Virtual Boy. It's understandable that they trusted Yokoi on this matter; he was the mastermind behind the Famicom, after all, the most successful Nintendo system ever. But his vision was too far ahead of its time, and indeed, too far ahead of the audience too. The compromise of a stereographic monochrome screen proved to be a death knell for the system, due to the headaches it caused.
1. The Super Famicom (aka. SNES). Before you go off on a rant, consider: the SNES acknowledged that Sega had made the right move, and opened the door for competition which the NES did not. By being just close enough to the Genesis that it only sustained the values which the Genesis championed, the SNES set events underway which led Nintendo to near-destruction over the course of the next 14 years.
Sky Render - Sanity is for the weak.
