please dont call mainstreamers gamers.... makes me sad.

The gaming market will shrink down to about the size of the PS2 era. Microsoft and Sony will fight for large chunks of the marketshare while Nintendo essentialy takes what it can get like it did before the Wii. China will grow but I think that might be the gen after. 

I never said i saw it as two markets. Nintendo created a new market with the Wii, which is the non-gamer market. People who have a passing interest in games. Casuals have an interest in games but they dont game as much as hobbyists. Nintendo knew what they were doing and to whom they were targeting. They were targeting people they knew had no interest in traditional gaming because it had evolved beyond them. Again, the problem with that is you have to hold their attention or else they will move on to the next big thing.

The people who play the DS are more dedicated gamers. Nintendo's niche is handheld not consoles. This is exactly why they had to go after the non-gamers with the Wii. DS are not wholly the same market as the Wii (outside of the core audience). Its the equivalent to something along the lines of the Playstation or Xbox on consoles. They have proper third, second and first party support support and have games for everyone available. Sony is on consoles what Nintendo is on handhelds.

The DS appeals more universally to women as well much like the Wii did and age plays into it. The younger the better a Nintendo product will sell with the female audience. I think Nintendo is the only brand to have a 50/50 or more male/female ratio. 

Nintendo sells very well with children, but once the kids find out about COD or the next big third party or first party game in the west god help Nintendo on consoles. 

In Japan the DS/ 3DS is huge. There is something about the western market that is turning them off and the only place they can get their pure Japanese experience is on the 3DS. That and portability makes gaming easier. Thats where the 3DS is selling the highest right now according to VGChartz. Again Nintendos highest selling platforms are the DS and the 3DS. All of them stand behind the PS2 which is still the greatest selling console of all time. Sony truly made sure that ever demographic was satisfied with that console. It gives them their cultural gaming better than any other platform.

In bold, that is flat out delusional. PS4 will not beat X1 by 35mil. Maybe by 3-4mil, maybe lose by 3-4mil but not so convincingly. No way.

It is and it isn't. Its not just about genders anymore, its about the time put in to the console because the gender gap is also closing as others a lot of females and children are moving on to the Playstation and Xbox as well (as you saw last gen). There is something about the 3DS that Nintendo needs to transfer over to the larger console if you want that answer. Proper third party would be that answer and not just waiting for demographics to appear. The Wii U was a step in the right direction for that but again, they didn't consult third party. You see the 3DS has more dedicated gamers. If the got a percentage of 3DS gamers the attach rates don't show it. Third parties can survive on the 3DS. On the Wii...not so much. The Wii U will have more dedicated gamers because the non-gamers have moved on. Problem is the numbers need to grow to have a proper return and on consoles Nintendo has a stigma with third party games and their gamers tend to prefer to just buy first party from them eight times out of ten. Thats a very big problem. When Nintendo has all parties flourishing on their console like the DS the people will come, but thats just the problem...you have to nail that from the start. They didn't. Hopefully next gen they will.

It misses the mark completely.

It is ignorant about why the Wii sold, and it buys into the casual fallacy.

That's what's flawed about it.

As I said before the 3DS has a solid base in the japanese market. This has a lot to do with the content, cultural relevance and portability of such a device. Its basically a cultural device more so than even the consoles. Theres definitely not a boom going on in Japan so I believe they are making conscious decisions. I don't really know because I don't live there and haven't really followed the market, but Nintendo needs whatever content is on the DS to make its way to the Wii U in some console definitive form to sell itself differently from the DS with charm. Perhaps more Pokemon and  will do the trick? There hasn't been a proper Pokemon on consoles since what...the N64 (IE:Pokemon Statium and Pokemon Snap)? Its just like how I would say the PSP Vita needs Monster Hunter and it needs it now. Its funny that I just typed that because bring this up because while brainstorming how Nintendo can fix their issues, I just figured out how Sony can fix theirs with the Vita as well. 

Third parties did very well on the 3DS. I'd say with the technology in the 3DS 600k sales to 3 mil in sales is a win for third party on dated tech.Once more Nintendo is more profitabile in that way because they dont push tech. They make it affordable so they can get their return and just focus on the games. To the second portion of what you're saying the Wii U is stuck in content limbo.The Wii U demands to be seen as an equal to the Xbox and Playstation and really brought Nintendo back to square one.

Accessibility, marketing through generations and growing with the portable as a fitting platform of choice is one of the reason people are so loyal to Nintendo portables. They don't make drastic changes but they offer that classic Nintendo content. The risk is also lower to show off more IP's on a portable. Of course I cannot have the definitive answer to everything, but I do see a few of the answers. Akin to that on the competition doesn't take too much risk to the main consoles even though they push the power. They keep the games identifiable as they move on gen after gen.

The biggest problem I see with Nintendo is the exclusive third party games they've opted to sell the Wii U are niche games. They don't seem to care to tap into whats big in the west so they go after Bayonetta 2 and they come out with X. Of course I will definitely be playing those games, but others? I dunno. We all see that they want the third party, but why aren't the fighting for them? That constitutes half or more of a consoles sales. I hate to get philosophical, but sometimes its the most self-sufficient one that is the most anti-social.

I don't know if this means much to you, but I hope it helps.

Hm.... I will never buy the argument that casuals have 'moved on' when I see guys in Target buying games for their nephews/nieces and they can't tell the difference between Wii and Wii U. How can one have 'moved on' when one has no awareness? People may downplay the significance of basic product awareness, but let me give you an example.

Let's say I'm selling a pen, the Write-Way. The Write-Way is advertised, gets popular, and word-of-mouth is strong. My pen does something cool and different; what that may be, you can simply imagine. All right, so a few years pass, and I release the Write-Way U. I don't advertise to the people I did before, and I make no efforts to promote the belief that my newest pen line is worth having, or upgrading to as compared to my original Write-Way. When a consumer walks into the store, they see Write-Way, then Write-Way U, next to each other, with seemingly only a letter being the difference. Where's the compulsion to buy? Is my product truly poorly conceived, or did I market the wrong way?

The Wii U's biggest problem has always been its marketing. If they had the 'U' instead of a 2, they needed to prove that Wii U was worth the extra money, the investment. Awareness isn't there, and without awareness, compulsion to buy doesn't exist except amongst existing Nintendo fans. Targeting children in ads is misguided in an age where tablets, smartphones, and all sorts of nifty trinkets get targeted to them.

Also, 3DS has done well because its shelf-space does not include the original DS line anymore. People see it as new, without the need for ads. If Nintendo stops shipping so many Wiis to stores, Wii U could turn things around without the need for extra ad expense, since consumers would only have one console choice.