Actually I think they are internally more worried about their handheld business than their console one. 

The 3DS is not behaving like a healthy platform does, a healthy platform does not start showing year over year decline in what should be its peak and coming off its strongest software release schedule. 

Smartphones are like a slow moving cancer that slowly but surely are eating away at the handheld business pretty much unabated. Nintendo is desperately throwing everything they can at it (Pokemon, Zelda, 2D Mario, 3D Mario, Mario RPG, Mario Tennis, Monster Hunter exclusivity) and the situation seems to be growing worse, not better. 

To be honest I see it almost every day, kids overwhelming even prefer to play on an iPad versus a 3DS. I honestly think this scares Nintendo more than any challenge they have ever faced in the game business. 

http://gamrconnect.vgchartz.com/thread.php?id=180764&page=33

They probably are, but 43m to date and 100k+ weekly are still pretty good numbers. It's not in struggle city like the Vita or anything.

and there wasn't 1 GTA for PSP either

Edit: I just realized my last post I said Gran Turismo when I meant Grand Theft Auto........ Damn accronyms, but GT did help a bit too.

The problem is though they haven't made any money during the 3DS era (three straight years of operating losses) and more importantly if the traditional handheld market is on a decline, then it has huge implications for how Nintendo has to do business going forward. 

In other words ... it's not really shocking that they are scrambling to find new business areas (quality of life). I think they are hedging against a full on collapse in the console biz combined with their handheld business declining to pre-1998 levels. 

I don't think smartphones are even near a saturation point yet either, I think as more time goes on, more kids will start to get their own phones at an earlier and earlier age. 

Really to your original premise how much of the 3DS' total is really coming at the expense of the "Nintendo console" concept as a whole? I'd say Japan has pretty much checked out of the console business for sure for example. 

I just don't think it was anywhere near the game-changer MH was.

So basically, "Nintendo is doomed"?

As a business, no, I suspect honestly even if worse came to worse, Nintendo would end up jumping in bed with some other company or going on to make high margin products in other industries. They would still find a way to exploit their character IP too. 

I mean, a Victoria Secret model is still a Victoria Secret model even if her marriage falls apart, there likely would be no shortage of rich, wealthy suitors lining up to date if she ever got on the market, lol. 

So Nintendo will never be like Sega. 

But as far as "traditional" Nintendo, as in the one that you and I grew up with? That company may be in jeporday of never being quite the same, but really when you think about it, Nintendo has been basically been using the same business model for almost 30 years now. I mean how much has the world changed since then, how many popular trends have come and gone, how much has technology changed since then ... that I don't think they neccessarily have anything to hang their head about. 

Honestly I'm not even sure if video games is that great of a business to begin with ... is anyone really making any money here? lol. Even the big pubs seem to be bleeding losses, and some day GTA and Call of Duty will fade too, so where will Rockstar and Activision be then? It's a tough business honestly, this isn't for the faint of heart. 

Sorry, I meant GTA not GT. There were 2 GT games, which easily outsold the 2 best MH games. I think GTA was a much bigger game changer then MH.

Still PSP had GTA for NA/EU, GoW for NA, GT for EU, Crisis Core (among other JRPG's) for NA/J, and Monster Hunter for J.....

Vita has Uncharted and Assassin's Creed for NA, and Persona for NA/J............not the same as PSP, Vita is a flop for many reasons like this.