Basically I agree 100% with Rol, and I'd just like to emphasize one additional point that is seldom given the credit it deserves in my opinion. It's not just about being innovative, but also knowing how to innovate *well* that separates Nintendo from other videogame companies such as old Sega.
That means not just delivering a new, surprising experience - both in hardware and software - but also knowing not deliver it prematurely, so that the end product feels complete and coherent, and also knowing how to properly integrate it with whatever still works instead of trying to reinvent the wheel.
Since these trends are contradictory it takes a lot of effort to achieve the correct balance between them, and I think most of the times Nintendo are criticized by their fans are when they are unable to reach this perfect balance. So this perfect execution balancing between old and new is what I feel most people actually mean when they call Nintendo "innovative".
It's actually similar to many big and successful companies in their time. Apple's products are like this, in the sense that most of the time they rely on refinement. Sony (old Sony, aka the electronics manufacturer) was also revered due to their refinement more than their inventiveness, as many of you know how few of their truly original ideas went on to become standards. Nintendo's balance is more skewed towards adopting unproven technologies at times, which is also usually when they suffer more (VB, 3DS, initial DS sales, eReaders and countless other peripherals).
edit: in fairness, Nintendo have also been punished when they have failed to innovate enough, eg: the Gamecube, diminishing sales for Zelda after Oot, etc.
and just because it's hilarious, here's an unrelated Skyward Sword clip:
http://www.ign.com/videos/2011/11/01/zelda-skyward-sword-link-poops?objectid=872155
Until you've played it, every game is a system seller!
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