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superchunk said:

I am not sure if surrender/white flag is the best analogy. I look at it as they have realized its not going to become a hit console. Even with big games like MK8/SSB launching it will do what it has done for two years now, but its not dying yet... just not growing either.

So its still bad, really bad. But Nintendo knows to not expect growth from this generation. Just sad they didn't see this last year like most of us did.

I'd say the evidence of potential "surrender" lies with their software forecast.  They are only expecting 6% growth YoY with MK8, Smash, and the natural software boost consoles get as they get a larger install base.

Software shipments in their second full fiscal years

PS3 up 79.1%
Wii up 58.5%

That was even without the disastrous first full fiscal year of software that the Wii U had.  Maybe they are just lowballing the number, but if not it could suggest that software releases will be thin outside of what has already been announced.