In the consumers point of view, I think it would be better if Nintendo left the hardware market and produced their games to the other consoles and PC. We wouldn't have to buy multiple consoles and we could still play their games, in addition to Sony's and/or Microsoft's, and the third parties that are not on Nintendo consoles. The only threat when one of these companies goes third party is the possible reduction in the competition in the hardware market. But honestly, I don't think Nintendo is contributing a lot to this competition.
When considering Nintendo's point of view, the answer is not so obvious. I would say that going third party would be the best solution, unless they have a good idea for a new piece of hardware. For instance, if they could create a hybrid console-handheld, which considerably differentiated from the competition and was able to combine the strengths of consoles and handhelds, while strongly appealing to kids, they might be able to succeed. If they continue doing what they're doing now, then I think they're going to sink.
