Don't you dare not to mention this other masterpiece:

It's just because most third party games don't appeal to the Nintendo crowd, simple as that.

Very wrong.

Let's take the Wii for example - using Metacritic's top scores for 3rd party Wii games:

Rock Band 2 - 1.00 Million Units Sold
Xenoblade Chronicles - 0.83 Million Units Sold
Rayman Origins - 0.42 Million Units Sold
Resident Evil 4 Wii - 2.13 Million Units Sold
Okami - 0.52 Million Units Sold

Those are the top 5, 3rd party games on the Wii. Two were over 1 million units. That's absolutely horrendous for games that have a >90 Metacritic score.

You can defend it all you want, but even the fantastic Wii titles like Xenoblade have pitiful sales worldwide. Had Xenoblade been an HD affair, it would have likely sold 3-4 times as many copies, worldwide.

The Wii/WiiU caters towards a specific crowd. That specific crowd does not buy large amounts of non-Nintendo core titles. Comparatively, the 3DS/DS appeal to almost everyone, and 3rd party sales are generally better among top-tier titles.

OP: your thread smacks of condescension to ps3/xbox gamers. You are suggesting that nintendo gamers have better games and so dont bother to buy 3rd party games whereas ps3/xbox gamers are used to crappy games so buy these in droves. I mean really? Thats the best you could come up with? Seems to me like you have just twisted things around so they suit your POV.

You and I both know that while there are some 3rd party games that are crap, there are lots that are really really good. In fact judging by games site awards some of these would be better than some of nintendo's games.

The reason these games dont sell on nintendo consoles is because a number of nintendo gamers arent interested in 3rd party offerings, especially since these tend to be different and more mature than nintendo titles.
Also a number of nintendo gamers tend to own ps3/xbox and do their 3rd party gaming on these (though this could be a result of poor 3rd party support on the wii.

I'll probably get hate for this but I think ALL gamers (and even Nintendo) would benefit if Nintendo were to become a software only company. Don't get me wrong I love Nintendo and grew up with them but I just don't see them being very successful (console sales wise) this gen. They obviously dominated last gen because they were able to capture the 'casuals' attention. I think Sony, Microsoft and the mobile market will and have prevented them from continuing to dominate.
Going software only would generate more game sales as they would go multiplatform and have millions of more potential customers. They could also use their all their development teams and really focus on what matters, games! They would have more time to create new IPs when not worrying about supporting a console.

I don't think as many core gamers or casual gamers will get the WiiU (at least at its current price) because of the gap in power between it and the other upcoming consoles. The WiiU is headed down the same path as the Wii in terms of power. The Wii was a little bit more powerful than the GC/xbox/PS2 gen and the WiiU is a little bit more powerful than the 360/PS3. In this upcoming gen third party games will be created for the PS4/NextBox and then be ported to the WiiU. The ported games won't be as bare-bones as last gen ports but they will still be inferior graphically to the PS4/Nextbox versions. I am also concerned about how much effort 3rd party developers will put into utilizing the game-pad as many of them were quite lazy with the motion controls they were given last gen.
Another just important difference will be the online functionality. Nintendo definitely has some good ideas but then again we haven't seen Microsoft or Sony's full hand.
I expect Nintendo's first party games to be as good as ever and I hope they come up with some very interesting uses for the game pad and prove me wrong about the WiiU. I will probably end up buying one when the price drops and their first party games start being released.

Remember these are just my opinions...

Who else thinks a software focus Nintendo would benefit everyone?

Most people buy Nintendo systems to play Nintendo games. Their first party games hog up all the sales, leaving third parties up to dry. Third party games will naturally come though regardless if they have enough market share.

I basically agree.

Nintendo games are high quality and create serious competition for third parties, wheres on Sony and microsoft consoles the competition isnt so fierce and across so many genres. Sony tends to make niche titles aside uncharted god of war and Gran turismo and microsoft does Halo and gears of war with some forza in there. Nintendo has a plethora of franchises, so yes, to be sucessful on a Nintendo system you have to go the extra mile. For thrid parties its easier to throw the blame on the consumers (like Activision is doing). That only shows how poor their marketing is. The products they make are supposed to meet the appeals of the gamers, not the other way around, that is laughable. They are basically complaining that they are too incopetant to penetrate a different segment of the market with the same offer. Pure incompetence.

Just like Sega did when they went 3rd party?

Give me a break. All it would do is force a lot of the talent to leave Nintendo. the only reason that other people advocate this is because they're sick of seeing Nintendo get such high ratings and want it to be on a level playing field with other publishers...

Nintendo's developers are much more talented than Sega's, and they have many more popular IPs.  I personally believe they could do fine without their own console.  I don't think many developers would turn down offers to work on Nintendo IPs.  And from what I've read Nintendo isn't super controlling of their developers like other publishers are.

Since Nintendo entred the market.