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Nintendo has 2 options

Either make a very cheap Nintendo only console

Or compete with the other 2 consoles with a powerful console

The problem is the Wii U is the Gamepad makes the console 80-100 USD more expensive that it should be

I think the first option is the best one for them. Nintendo not only is much smaller than Sony and Microsoft, it is also smaller than Ubisoft, EA and Activision.
They would have to associate themselves with a company like Panasonic or Samsung in order to compete as equals with Sony and Microsoft.

I think they should support the Wii U until they can sell for USD250 a console with 12 gigs of ram. that may be late in this decade.

They also shouldn't miss opportunities like buying Atlus