According to VGChartz, the 3DS is the top selling videogame system out there.  But, Iwata says this:

“In the US and in Europe we were unable to create sufficient momentum of the Nintendo 3DS system during the holiday season, and so the situation was not looking good at the beginning of the year,” he told investors.

And by "top selling", I also mean in Europe and also North America.  If the 3DS has this issue, what does it say for the industry as a whole?  This bothers me personally.

it says that we are at the end of a very long generation. and the transition to next gen has already begun

I think they meant before now. The 3DS is selling 50k ish a week in europe and the Us now. Its definitly a sucess.

I do think theres a general expectation from analysts that new consoles perform as well or better than the ones from past generations, but this completely ignores the evolution of the economic situation in the world and how pressing these new consoles/updates really look like.
Graphics nuts will jump the gun on me here, but the fact is the graphical jump from one generation to the next is increasingly harder to feel. This makes upgrades feel like less of a necessity and more of an excess. This means that the barrier to adoption of a new console is increasingly higher from generation to generation.
This leads me to believe that console sales will be slow until this barrier is broken down by several quality pieces of software. When that barrier is broken then people start adopting the new console. Its whats happening now with the 3DS.

That and lack of YoY growth.

In the US and in Europe we were unable to create sufficient momentum of the Nintendo 3DS system during the holiday season

What did you expect only releasing Paper Mario for the holidays?! They really should have had a bigger game last holiday. ...

Latest weekly sales figures I thought showed that the 3DS has outsold both the PS3 and 360 this time around.

He's talking about Europe and US, TC.

Before we say things like that, lets take a step back and examine the handheld itself.

-3D is not as compelling as the Dual Screen mechanic
-Looks like a DS (Though XL kinda? changed that)
-$40 games compared to 99 cent and free games.
-Terribad library up to its 2nd year.

3DS problem isn't really the industry, it's factors outside of it and the shortcomings of the 3DS as a product due to Nintendo's mismanagement after a while. Really this thing was set up for failure but a massive storm of games are looking to solve the problem for at least a while.

Yes the industry is kind of in a weird position right now but hard to blame the industry for all of it. What you SHOULD blame the industry for will be revealed in about a year I presume. (No this has nothing to do with PS4 and Nextbox launches.)

It's because huge corporations like Nintendo, Sony, Square Enix, EA, etc. have become so bloated and inefficient that they need ridiculous sales to cover their operating costs and stay afloat. There's no nice way to put it really.

Ur right Animal Crossing should have had a worldwide release