It's past time for them to go third party. I've owned every Nintendo home console, and every handheld since GB advance. I love Nintendo games. But, at this point, their games are being held back by weak hardware.
BOTW is a great example. It is an excellent game. But, it looks like an early X360/PS3 game, graphically. The frame rate issues remind me of gaming in the 90s. If it were on modern hardware, these problems wouldn't exist. It also would sell 3-4 times as many copies.
With all of that said, I suppose their sales tell us that they should stay in the handheld business. And, that's fine. It does not then follow that they must stay in the home console business as well.