I think the main problem with it is that Nintendo made a core/media-centric gaming console instead of an actual successor to the Wii concept. Which is fine, but I think they are trying to market/sell the device using the formula the original Wii used and therein lies the problem. This is a different product and required a more nuanced approach.
It's not a casual console like the Wii was, it's a traditional controller with a touch screen in the middle. Yet Nintendo is kinda trying to sell it as a kids/casual product and it's not resonating with that audience because it's not casual enough for them. And it's not resonating with core players because they all already have a 360/PS3 so this offers them very little that's a noticeable step forward.
It could work as a concept, but it needed more horsepower under the hood to immediately differentiate itself from the PS3/360. It should be able to run any PS3 game at 1080p without working up a sweat for example. Multiplats should all look better than PS3/360 versions with ease.
The tablet screen allows for a lot of media functionality too, they needed to push that more by adding deeper remote control functionality I think. Nintendo TVii needed to be a better service also. The basic TV remote and Youtube stuff is neat, they needed to just push it further though.
And they needed to invest in more core IP like Bayonetta 2 and X (need 3-4 more projects like that in the first 18 months from launch). Nintendo's mistake is thinking third parties will just naturally fill all these gaps, when exclusive titles are the ones that define a platform.
The controller aesthetically needs some work too. It's too fat/bulky and looks too much like a child's tablet. It needed to be sleeker looking, something people would want in their living room and could function as their main remote control.
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