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Nintendo's loss is equal to why 3DS launched slowly and why Wii dropped off so quick.

Lack of games.

It can't be repeated too much... games sell consoles... software sells hardware!

3DS was too expensive and could have probably sold at a meager profit at $199. Combine that with putting out actual games on day one including the online store and it would have never needed a price cut.

Wii simply stopped receiving high quality and widely wanted games in 2009. NSBMWii was pretty much it. From then on Nintendo seemed to already by focused on next-gen hardware behind the scenes because their support at retail was lacking... seriously.