I understand this, but when iphone/ipad/smartphone games inevitably become better and more numerous, will people still see a reason to buy Nintendo products?

Even then, I'm not sure we have the information to conclusively say either way ... Unlike the Wii, the Nintendo DS didn't (really) have any significant pre-launch hype surrounding it and it slowly won over the mass market by providing games and interactive experiences that people desired; and is now the most successful gaming platform ever.

While I'm certain people will disagree with me, one unconventional "killer app" that Nintendo could produce for the expanded market would be to take the Art Academy games from the Nintendo DS to the "next level" and release them for the Wii U. How I imagine this would be a game with 10 beginner, 20 intermediate and 30 advanced lessons in several different art technicques. In ways this could be the "Wii Fit" of the Wii U because of how large the audience of people is that want to learn to draw but are to embarrassed to take lessons. I could be wrong but I suspect that between Nintendo and third party publishers there are dozens of similar ideas which could be applied to the Wii U; and if there are enough developers producing enough content the Wii U could become surprisingly successful.

Edit: On this videogame concept ... It also seems to be perfectly suited to downloadable content being that you could release "Master's workshops" that explain how to use the tools and techniques demonstrated in the game to make particular artistic styles. Get someone from Marvel or DC comics to do comic book art, and someone from Blizzard (or wherever) to do fantasy art, etc.

I'm not sure smartphone and tablet games will become better and more numerous ...

I've said it before and I'll say it again, there are many similarities between current mobile application and game development for smartphones and tablets as there was webpage development during the dot com bubble. There are very few companies in this market that are making a significant amount of money, or who have a viable business model, but there are tons of speculative investors who are giving money to these companies to keep them afloat in the hopes of eventually making it big. I suspect it will get worse before it gets better, but eventually we will see a crisis of confidence, investment will flow out of the market, companies will fail in high numbers, and those that remain standing will do very well for themselves.

My personal expectation of the results of this is that the game companies that survive will be those that produce insanely low budget games and sell them for a small amount; and larger games that require a higher selling price will die out on the smartphones and tablets.

She is a hardcore casual.

lol

But seriously, this is why I hate labels.  We're all gamers, just like we're all movie goers, or drivers.  Sure, some of us like games more than others, but in the end, we all play games on electronic devices.

"Most analysts aren’t as pessimistic. Half of the 24 brokers tracked by Bloomberg rate Nintendo a "buy." Eleven rate the stock "hold" and Citigroup Inc. is the lone “sell,” according to data compiled by Bloomberg."

So only Citigroup is at "sell" right now (I am sure they will probably switch to hold or buy once the holiday numbers start coming in).  Sounds like most of the analyst see the potential of Nintendo to continue their path to success.

What is their business model? I think not even Nitnedo knows given their recent change of direction.

Nothing wrong with their business model just their software output since 2008.

I guess you didn't listen to the little speech given before the Wii U controller reveal? =I

You have to believe, man. Believe.