This is also the quote direct from Iwata:
As for which Nintendo IP will be used, we do not intend to make any exceptions. Potentially, any Nintendo IP could be used in our smart device software.
I think Nintendo basically researched this and decided this ... yes this could cause some people to not buy a Nintendo handheld, but a lot of people were fleeing from Nintendo handhelds anyway in favor of smart devices.
Now at least they can make money from those people too. There will always be a subset (probably a shrinking) of people that still want physical buttons on portable machines but I think Nintendo realized it was a unwinnable war against smartphones/tablets ... if you can't beat them, then join them.
Nintendo changed their mind here and decided the money they stand to make by doing this simply outweighs the negatives of undermining their traditional handheld business.
In a way I can't say I blame them, but I do think it's a little sad.
