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I don't know what Nintendo can do at this point besides drop price and push heavy on first party software as usual.

Vita currently has price parity ($249 wifi model), hardware superiority (spec per spec and more control input options), social connective superiority (Cross Game Chat!!! Finally), and online store superiority (monstrous PSN backlog at launch).

I own a 3DS with 1 game that I beat in 2 hours... its been kind of a bad investment so far, I hope there is some good software eventually. :*(

Needless to say, Vita is probably going to be my main system in the 8th gen.