I don't really think it has much to do with the fact the Nintendo simply doesn't appeal to westerners. 3DS has sold about 25 million in the west and Wii U about 5 million for a total of 30 million in western markets this generation and I'm gonna predict 50+ million lifetime.
The problem isn't that westerners simply don't like Nintendo or their games, the problem lies elsewhere. On the handheld front Nintendo now has to compete with smart devices that offer $1 or free games and on the console front they have a relatively expensive console for what it offers (low software output/weaker specs/less multimedia features).
I think Nintendo should focus on unifying the handheld and console fronts and offer low cost hardware/software with strong software support. Maybe they won't outsell the competitors but in this scenario they will have a large enough user base to sell their ip to and make profits.
When the herd loses its way, the shepard must kill the bull that leads them astray.
