I don't think anything as dramatic as "Nintendo is going to the way of Atari!" is happening.

All that's happening is Nintendo is reverting back to their old self's -- the GBA/GCN era basically is what they're back to.

The only difference is smartphones are a bit of a constant threat these days and the profit margins won't be as high because games cost so much more to make these days.

First, in the 1981-1983 timeframe, Nintendo was coming into their own.  They licensed out their games for home market.  This is pre-NES and no way did they end up topping Atari or many others in revenue.  For you to bring them up, and not show Atari, and then Sega later on, is pretty sad.

Second, marketshare matters, NOT profitability, as far as dominance goes.  You need to look at that, because it matters.  Is is very important.  From a pure busines side, profitability matters, but not as far as dominance.  Reality you have is that also dominance also means a time period where you are most profitable generally.  

In regards to the issue of Nintendo, they have had control of the portable handhelds, which is now looking to be threatened by the other smart devices.  There is a shift, and Nintendo has expressed concerned.  Factor in their up and down status over their life regarding consoles, with the Wii U look like a miss now, and you see why analysts seen Nintendo at risk.  To deny they aren't at risk, is to ignore reality.  The Wii U isn't getting next gen third-party software, and Zelda and others aren't as big of a draw.  And then the 3DS is threatened by iOS and Android.  Kids get smart devices first, then maybe a game system second.  They are more likely to grow up on Angry Birds than Mario at this point.

That is the reality of things here, and why the concerns, and why Bushnell said Nintendo COULD (didn't say they were) on a path to irrelevance.  But, to even hint this is made into people saying it WILL happen, and to call them loser idiots.  And yes, people have said that of Bushnell by people who worship at the temple of the Mario Monks.

The "kids growing up with smart devices" is the thing that I think bothers Nintendo the most.

I think they'd be OK with those devices taking away casual adult players, but the entry level kids market is a real kick in the junk to them.

Every time I'm in an airport these days (and I've been in like 8 the past year), the number of kids I see using their parents or their own iPad/smartphone to play games on outnumbers the kids with DS/PSPs by 4 to 1 at least everywhere.

2DS is obviously I think trying to take some of that audience back.

That's a big dodge. Just admit it. Nintendo came out of every gen with the highest profits.

Profitability vs marketshare is debatable.  Leave it at that:

http://www.healthmr.com/january-feature/

People debate it.  What I will say is you seriously need to leave 1981-1985 off your chart, because Nintendo wasn't even really competing on the console front, at least not in North America.  

I will say, heck, I can be argued to have more profits than some console makers, because I lost less money.  In no way does that make me more dominant than them.

Who cares? Profit =/= relevance in the real world all the time....

the GC brought them money, but guess what they were almost completely irrelevant that gen when the PS2 completely dominated the industry....

The one thing that I don't want is Nintendo being scared of VBoy, 3DS, and WiiU that they decide to skip out of VR.

Nintendo has tons of experience crafting games to be viewed in 3D, I wish that they just don't throw it away. It's not no gimmicks that's the answer it the right one.

Damn I really want a VR Metroid.

Profitability does keep you in the game though, but doesn't mean contentwise you end up controlling.  You had the case of Sega going VERY aggressive price and marketingwise with the Genesis/Megadrive and ended up going past Nintendo.  They were on very thin margins though and eventually Nintendo caught up.  HOWEVER, as you said, you can be more profitable, but not matter.

So, in debate of what is going on, it is possibly AVERAGE profitability and revenues vs during different time period.  One can argue reasonably that Nintendo has been the most successfuly videogame company left in the industry.  This does NOT mean it had been the most successful EVERY time period it has been in the business.

Another reality here is that Nintendo really didn't compete against Atari, not when Atari was relevent.  This relevance is pre-Tramiel.  Tramiel worked ot make Atari more profitable, and cut costs, making Atari less relevant.  By time Nintendo gets into console market, Atari is not relevant.  And you see Sega gettng more profitable by dropping a console.  They are more profitable now, BUT far less relevant than when they had a console.

Even though I'm don't really like it, I do think that Nintendo's going to ditch the gamepad soon.

There is no game out that really justifies it's use when a pro controller is fine for most stuff. Maybe sell the gamepad again with Zelda like they did with SS.

I don't see that at all.  That is a differentiator for them.  It would be like Microsoft ditching Kinect.  It isn't going to happen for them.  There will be the second screen though. Heck, maybe the 2DS is a move by them for other reasons than just the kiddie controller.  Maybe they go 4 2DS controllers hooked up as second screens.  They also have games programmed to use the second screen, like Nintendoland.