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I see things quite the opposite - they took what made Wii successful and massively downplayed it for the Gamepad. Instead of going for SuperWii with Wiimote2, to continue Wii legacy, and better innards + GamePro, to remedy the problem of 3rd parties on Wii, they went for another gamble...and so far it seems they've lost.

Perhaps they can still bounce back, but I think they need to realize that Wii's success was not due to Mario, Zelda and their other core franchises, but mainly due to WiiSports, and that they desperately need something like that if they want to attract back majority of audience that actually made Wii what it was.