The fundamental flaw of the Wii U is this -- Nintendo thought that by getting ports of PS3/360 games that would effectively bolster the appeal of their system and make up for inevitable losses on the casual side (repeating the Wiimote was always going to be nigh on impossible, it's like saying "make another Pokemon craze" at the snap of a finger).
But I think what we're seeing is all these ports have basically zero appeal to non-Nintendo fans. They're fun for hardcore Nintendo fans who haven't played them before to pick up, but the teenager who owns a PS3/360 and primarily plays games on that isn't going to be impressed by franchises that have been on PS3/360 for 6-7 years now finally showing up on the Wii brand.
The Wii U needed third party games that either fell into the following categorey
1) Have hardware that's so "idiot proof" more powerful than a PS3/360 that devs could quickly and economically make superior versions of most PS3/360 titles without much debate/fuss (ie: being able to to run games like BLOPS2/AC3 in 1080p vs. 720p without needing to flex its muscle too much). This would mean Nintendo would have to throw out that super-low 30-35 watt power consumption and go with something reasonable like 60-65 watts though.
or
2.) Simply be the bare minimum full generational leap above the PS3/360 without going too crazy over the top ... ie: something comparable to a mid-range modern AMD PC GPU. Something akin to a AMD 7770 GPU, only stripped of the GDDR5 for a cheaper/cooler DDR3 + eDRAM combo and made smaller/more power efficient. This is only a $120 even at retail, it's dirt cheap, but paired with even a weak CPU, it would blow the PS3/360 out of the water.
As for what happens to Nintendo if the Wii U "fails", I think it'll still do well enough to earn Nintendo themselves a solid profit in the end. I see it selling 40-50 million in the long run, but Nintendo will have to start slashing the hardware price by next summer.
I think what will happen if anything is Iwata will step down and take the blame, a new Japanese president will be hired, one that will be more Western-centric, and Nintendo will follow a direction similar to what Square-Enix.
I would guess also they will pursue a strategy of making a gaming tablet based on the Android OS if Google supports them in allowing to make a customized version of the Android OS (ie: no Android games at 99 cents to undercut Nintendo, other kinds of apps allowed with a Nintendo tax on them).







