Currently Online 
What the Wii did was set unrealistic expectations. I still say that it was an anomaly and that the baseline for a Nintendo console, assuming that it lacks full-fledged third-party support, will be closer to Game Cube levels. However, because of the Wii, the Wii U looks awful instead of average.
There is also the possibility that the Wii turned Nintendo into a company intent on finding the Next Big Thing. Gambling on hardware is a risky endeavor. Yeah, you might hit the lottery but the odds are greater that you won't. When that gamble raises the price of your console by a significant degree, then things might turn even more dire.
I also believe that the abandonment of the Wii did some damage, though I think much would have been forgiven had the Wii U come out of the gates with a cornucopia of great software, which I think a lot of people were expecting. The difficulty transitioning to HD (which should NOT have been that serious an issue) might have dealt serious damage.
