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Install base is always important. Iwata referred to the GameCube as a failure in terms of sales, and he really did aim high with Wii, and I suppose they wanted that with Wii U, but they failed. Of course, they aren't a very large company like Sony or Microsoft, so they can't do something extremely crazy and afford to get away with it. But they are capable of doing it successfully, getting large install bases, like with their handhelds, but they've simply screwed up their consoles and unable to grow install bases to a significant amount.. If they stop screwing up their consoles (except for Wii, which was a huge success) then maybe they can go for a large install base. They could still do it without significant loses.

As for them focusing on short-term profits, I'm pretty sure Nintendo has stated multiple times that they're interested in the long-term.They've talked about how putting their games on iOS and Android were a short term solution, and weren't what they wanted, they wanted long term solutions.