Nintendo's position is not as untenable as you makes it sound... Really, the only doomsday scenario I see for them I'm the next few years is if they take that "kill or be killed" mentality you mentioned, go all in on an expensive console sold at a large loss to compete, and it doesn't work out.
Microsoft isn't going anywhere... They're still selling plenty and have shown that the Xbox is a kind of flagship, cool brand they'd lack otherwise and so have been willing to accept major losses on it. There is zero chance of nintendo kicking them out with the NX, even if the NX is a smashing success.
Nintendo can still make plenty of money in a three console environment, they'd just need to be on more equal footing like they were last gen.







