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Hindsight being what it is, I think trying to make an expensive "successor" to the Wii was a mistake all along.

What they should have done is made a HD version of the existing Wii with a better OS, better eShop, more casual apps, and continued to support it with casual only games. Price that at $150.

Let it have Wii Sports 3/4, turning Wii Fit into its own updating channel, etc. Focus it as a fitness + casual device with wacky off-beat casual titles that maybe 2-3 small teams could be set aside to work on. Release this around 2009 or 2010.

Their traditional game division should've gone to work on a proper next-gen console for a fall 2012 launch. Instead of the Wii U, this would be a more traditional device with horsepower similar to the XB1/PS4 but with a one year headstart. No tablet controller, aimed at core players, more investment on launch exclusive titles suitable for the audience they were targeting (no excuse, Nintendo made a fortune on the Wii/DS era, they had more than enough $$$ to bankroll a lot of next-gen titles).

Wii would just become a side division aimed at casuals fully (whatever market for that was left), the other Nintendo console would become their actual console for the next-gen Zelda, Metroid, Mario 3D, Smash, third party, etc. titles.