Why Nintendo is failing and will likely replace both of their consoles earlier than expected.

[Tarumon]

Soundwave said:

3DS is no DS, but it will end up selling better than the PSP for sure, and sell a ton of Nintendo software with it, which is good for Nintendo.

Wii U, I think is going to be a relative flop. I don't think Nintendo knows what they're doing in the console space and they really haven't for several years now (see the Wii losing most of its market momentum as well). They will lose their casual base and have mostly just Nintendo fans left to sell to.

I think the Wii U really will perform like a modern GameCube-N64, but the market is so much bigger today that a modern GameCube probably translates to about 35-40+ million users IMO.

Internally I believe Nintendo is already under way with the development of a console-portable hybrid platform, which could be fast tracked if Nintendo decides the Wii U isn't getting the job done. ARM processors and portable processors in general are growing in horsepower by leaps and bounds every year it seems. 

Ever since Nikkei first broke the story on hardware team consolidation, more and more spin's been put on Nintendo's intent to truly innovate.  I think Wii U still packs enough to buy them some time.  XL and Gamepad are not that far apart in terms of a possible product launch in 2-3 years.  If they can deliver a Gamepad with 3DS capabilities (vice versa works too), then for the first time we just might have a device that can play all Nintendo games past and present on the go or shown on the big screen.  My cash is ready.