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No, they shouldn't. They've sold more hardware than Microsoft and Sony this generation across both platforms. That my friends is no lie. The 3DS has outsold many of Nintendo's greatest successes:

SNES, N64, Gamecube and I'm sure it'll outsell the NES within the next few years. They've sold at least 73 million units of hardware ,vs. Sony's 54 Million, and Microsoft's 21 million. Nintendo still has a place in hardware. One screw up shouldn't dictate if a company should go full mobile...like what kind of rationale is that? They come off the Wii and DS, selling 101 million and 150 million respectively and just because things aren't near those levels, they should immediately stop? No, that's not how it works I'm afraid.

Nintendo can have mobile and hardware because as long as they keep their dedicated software on their dedicated hardware, they will survive. All of Nintendo's 1st party content, that isn't a silly spinoff or Starfox sells 1 Million+ units. Splatoon sold 4.75 Million units in a little over a year, Nintendo's hardware isn't going anywhere anytime soon.

If anything, we'll see NX incorporated somehow into smart devices. If they continue to make cheap, yet relatively powerful hardware which is very feasible now, they will easily sell in the 50+ million range of hardware and that's no small feat.