Well, they do fine with their handhelds, because they own the handheld industry essentially. All big Japanese devs develop for the 3DS in some way or another, they own Japan, and handhelds.
The problem is the west. No western developer really develops on handhelds consistently. So the 3DS will struggle getting western support.
But the bigger problem is the WiiU, consoles are a western market. They are what handhelds are to the east. If nintendo can't get big western third party support, then it will have to rapidly expand it's studios. Right now, they are inadequate. They produce great games, but not enough of them.
I say it's time to build 1 to 2 more western studios like Retro. Buy some incredible talent, throw them an established IP to start, guide them. It worked magnificently for Retro who produced IMO 2 of the greatest games of all time.
Here's how it should be. Three western Nintendo owned and lightly guided studios developing games for Nintendo consoles. Nintendo's own internal studios doing there thing with Mario and Zelda for both handheld and console. Japanese devs third and first party developing for handhelds.
Then Nintendo could use second party, and maybe manage to snag a few third party exclusives.
Right now they are very strong handheld wise. Intelligent Systems has been a champ to the 3DS (besides Sticker Star). And I don't see them stopping. It's all about the West. They need to get a foothold.