You are woefully misinformed on the situation if that's why you think what you do. Nintendo would make more money in the short term, that's pretty much agreed upon by everyone. However if you think the quality would go up, then you have no freaking clue what you are talking about.
Nintendo only makes games as good as they do because they need them to sell their consoles. If they didn't have to do that, they could easily fall as low as EA. Look at the highest quality developers in the world, they aren't the third party developers, they're the first parties with some rare exceptions like Valve and Blizzard before they merged with Activision.
Not to mention they would be developing for consoles they don't own. Nintendo listens and responds very well to their internal developers, however the external developers have week long delays for a simple help request. Sony and Microsoft are better in that department but the help that first party devs get is unparalleled.
SECONDLY, if you think the casual games would go away, then again I have to inform you that you are woefully misinformed... Nintendo might not even make most of their games for the PS4 and the Xbox One, that's just what you want them to do, what would probably happen is they would make most of their games for the iPhone and free to play market BECAUSE that is where Nintendo games fit the best outside of their own console.
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