Doing 360 numbers in its first year would have still been failure territory and not enough to make third parties consider the platform in the future. The GameCube was easy and cheap to port to, so really, your proposed backup plan cannot work.

As for the possible reason why third parties don't want Nintendo around: Nintendo is not dependent on third parties like Sony and Microsoft, so third parties would be merely partners instead of being in the driver's seat. Nintendo games also raise consumer expectation for the quality of software as most Nintendo software doesn't have an expiration date; hence why Nintendo can maintain higher software prices and still sell more copies than pretty much everyone else in the long run. In order for Nintendo to come closer to what Sony and Microsoft provide, Nintendo would have to pay off third parties left, right and center which wouldn't be healthy business for a company that cannot subsidize its gaming operations through other venues. This entitlement to get paid off is something third parties obviously won't admit publicly as any moneyhats are usually covered up by fishy PR statements.

That leaves the question how it would be good for third parties to force Nintendo to become a third party. The simple assumption that Nintendo wouldn't be the same as a third party, just like the crippled Sega we've seen in the last decade, should make third parties feel comfortable.

What it comes down to is a fight for power, the leadership in the industry. Third parties want to have it and Nintendo is an obstacle, because they aren't enablers like Sony and Microsoft. Sega used to be an obstacle too, that's why Electronic Arts wanted them out ultimately. Sega didn't give in to the demands ("stop making first party sports games"), so EA did withhold all support for the Dreamcast. With the Wii U it's also pretty clear that Nintendo didn't give in to EA's demands which explains why EA decided to not even bother trying to get Frostbite 3 run on the Wii U.

Nintendo will survive by selling affordable hardware at a profit and having plenty of high selling software on their machine, plus accessory sales. If all components are profitable, the company will stay profitable. The Wii is the most profitable video game system ever made and it didn't have good third party support. There is also nothing that prevents Nintendo from continually expanding their workforce and as long as those additional development studios make profitable games, it's all good. With enough studios around, both new and old IPs can be created/continued without either one getting the short end of the stick.

And yes, Nintendo could come up with another Wii again. In fact, Nintendo is the only company who can. In order to make something like the Wii, you need top development teams that back the system. Sony and Microsoft would never go that route, because they need third parties, thus they can't take a radically different route. Valve, Apple and Google also need third parties to make their boxes have the slightest chance, because they have no first party developers to speak of (Valve hasn't really made a game in years). Apple and Google can throw all the multimedia functions they want at their box, but that's not what a video game system is about.

Unlike superchunk, I don't believe that Nintendo has to add any non-gaming functions to their systems, simply because in this day and age (and in the future) almost everyone will own other devices that do those things already. So it's pointless for Nintendo to add that stuff, because those features have next to no value to the consumer. What people care about though are games, so that's all that a Nintendo system has to do. A box that plays games and does it well. There is a big potential market that doesn't care about what qualifies as hardcore gaming today and neither sees iOS and Android gaming as something they would do on their TV. Nintendo just has to go where nobody else can or wants to go.

Nintendo will survive by selling affordable hardware at a profit and having plenty of high selling software on their machine, plus accessory sales. If all components are profitable, the company will stay profitable. The Wii is the most profitable video game system ever made and it didn't have good third party support. There is also nothing that prevents Nintendo from continually expanding their workforce and as long as those additional development studios make profitable games, it's all good. With enough studios around, both new and old IPs can be created/continued without either one getting the short end of the stick.

And yes, Nintendo could come up with another Wii again. In fact, Nintendo is the only company who can. In order to make something like the Wii, you need top development teams that back the system. Sony and Microsoft would never go that route, because they need third parties, thus they can't take a radically different route. Valve, Apple and Google also need third parties to make their boxes have the slightest chance, because they have no first party developers to speak of (Valve hasn't really made a game in years). Apple and Google can throw all the multimedia functions they want at their box, but that's not what a video game system is about.

Unlike superchunk, I don't believe that Nintendo has to add any non-gaming functions to their systems, simply because in this day and age (and in the future) almost everyone will own other devices that do those things already. So it's pointless for Nintendo to add that stuff, because those features have next to no value to the consumer. What people care about though are games, so that's all that a Nintendo system has to do. A box that plays games and does it well. There is a big potential market that doesn't care about what qualifies as hardcore gaming today and neither sees iOS and Android gaming as something they would do on their TV. Nintendo just has to go where nobody else can or wants to go.

After Kinect and Move, why would you be more positive about Microsoft's and Sony's prospects than Nintendo's? Doesn't make any sense.

The only thing where Nintendo will be cheap is the hardware, but not the games. Their Wii software maintained high prices while pretty much all of the HD games hit the bargain bin within a couple of months. It didn't hurt Nintendo that everyone was undercutting their software prices, so cheap and free iOS and Android games aren't a serious threat.

Simple media options that don't raise the price of the system can be included, but when the aim is user satisfaction, you better provide games. It always goes back to the games and it's not a good sign when a console is used more for non-gaming than gaming.

Nintendo isn't reliant on shareholders to have a healthy cashflow, because they have billions in the bank. As such, shareholders don't hold much, if any, power over the company. Also, investors want to see first and foremost increased profits and companies that manage to beat their forecasts (even companies who post lower losses than anticipated are seen as good investments). Market share is useless when a company starts to collapse under its losses. Third party software sales aren't anywhere close to as important as you think, because the royalties that Nintendo gets per copy are only a fraction of what they earn with the sale of a first party game.

The calls for Nintendo to go third party were always there, even during the Wii and DS peak years, because dumb investors believe that Nintendo games on more platforms will result in more profits. They don't get that going multiplatform will cripple the core business; hardware sales will go down and thus software and accessory sales for that dedicated platform as well; additionally, the pressure to price games lower on mobile will devalue Nintendo software on the whole; profit margins of Nintendo products would drop across the board, despite unit sales likely increasing; and once you've gone there, it's hard to go back. Then again, calling those investors dumb might be the wrong thing to say. They want to see a short term boost and then sell their shares. They aren't interested in Nintendo's well-being, they see it as just another opportunity to make a quick buck. Because once they've sold their stock, why should they care what happens to Nintendo?

Microsoft will use Kinect first and foremost for non-gaming, because Kinect is extremely limited in what types of games it can do. Their console isn't built around a different control input for games. Sony doesn't even bundle their camera with the hardware, so it's going to see even less software support than Kinect. Their strategies to create new gamers are even worse than the Wii U Gamepad. One year after the GC had released it wasn't easy to be positive about Nintendo either; things got even worse when they presented their Connectivity idea. The reset that happens with every console cycle allows a company to have a completely fresh start. Obviously, it can also go into the negative direction as the difference between the Wii and Wii U shows, but it creates a unique market dynamic that allows a complete loser to come back in full force.

You are right that the hardware can pose a huge hurdle, especially if it's not executed well. That's the main reason why the big third party publishers are still third parties. If selling hardware was easy, everyone would do it in order to not have to pay any royalties to another company. Given how big of a failure the Wii U is, Nintendo should be thinking hard about why they failed and why they succeeded in the past. If they draw the right conclusions, then their next console shouldn't be a failure. As an integrated hardware/software company, Nintendo has the flexibility to execute different strategies, especially because their IPs are strong enough to get a system going on their own.