I don't think Nintendo needing to make this decision is imminent anyway.
If Quality of Life fails and mobile continues to eat into their handheld profits ... then in 3-4 years, yes, perhaps Iwata will have to concede defeat here, but in that case I think they will do more than just make smartphone games. They probably will have to look into making games for Playstation home consoles at least as well. They'll probably continue to make game handhelds for a while though.
They still have a few more years to figure something out though. Lets see what happens.







