They should release a console that doesn't make them look like Nintendo's playing "catch up".

That depends on what they want to do.

If they're looking to return to profitability, they should be conservative. Conservative hardware, conservative pricing, conservative expectations. The only thing they really need to deliver is the games.

If they want to compete directly with other consoles, they need to completely restructure their business model. Broaden the appeal of their software, go back-to-basics with their hardware, and pay attention to the market.

If they want to return to Wii/DS level success, they should stop dreaming. The market today will not allow something like that to happen again, Trying to recapture that spark will only waste more money.

Subscription based ($0 - $100 in store and $10 - $15 a month for two years)
Retail selling NFC-tags that will be stored inside the console. Combined with download code to prevent from theft, but allow for selling. Download only at home or in store.
Portabel device the size of a smartphone or iPad. Could be used separately or with attachable gamepad.
(Something like PS Vita + Vita TV)
Some basic child-friendly VoIP, Chat and mail-function, Miiverse style.
HTML5-games and apps.
Possible for smartphone producers to integrate the Nintendo-part in their phones.

Unless they can come up with a similar strategy as with Wii that actually works, then they should NOT go with the whole "Power is not important" route. Their brand needs some fixing, continuing to go this route is somewhat ruining it in the eyes of some people. Pointing out the Gamecube as "evidence" for why the shouldn't make competitive hardware is ridiculous, Gamecube's failure has NOTHING to do with the fact that it competed in terms of raw power. I think we should take in Iwata's words regarding "absorbing the Wii U architecture" to consideration. This could mean that they want to create a platform development environment where they can successfully go through the transition from Wii U to (insert future console) in a safe and easy manner, maybe even have late-gen titles from Wii U ported to (insert console).

Iwata also mentioned that the "number of form factors" may also increase, this could mean many things. It's not clear if the form factors will be integrated, so they may still be named something completely different and may perhaps have different games (which they should do). It's also possible for the "number of form factors" to mean that each of the handheld and console has maybe different specs, like both a "cheap" and "deluxe" model for both the handheld and console. Maybe the cheaper handheld will be priced reasonably like $129.99 at half the raw power of Wii U, with the "deluxe" model being more expensive with maybe more raw power, at $199.99 for those who want prettier graphics. To keep costs down, it'll probably have an 854 x 480 screen, same resolution as the Gamepad. The same idea applies with the console, a $249.99 "cheap" model, roughly the same performance as PS4, maybe a bit better, and a more "deluxe" model at $349.99 closer to the power of PS5/X2. They're not interested in harddrives and such, so I don't think the differentiating factor of each model will be simply hard drive space. Porting from handheld to console will be relatively easy, porting from console to handheld will probably be a bit more difficult, but if the development environment is similar, they could use similar ideas from a particular console game and create a new handheld game using that same engine and groundwork. If the engines are flexible and easily scalable, then this could work out well.

Or maybe not, they'll just release a handheld and a console. The handheld can release first, maybe announcement next year and release in 2016, 5 years after the 3DS released. From then on, they'll already have a development environment similar enough to Wii U that they can port from the Wii U to the handheld, or they'll essentially have a "head start" in terms of development, where they won't need to learn a completely different type of architecture. If it's unified shaders, then it'll be unified shaders, it won't be the differences that had arisen which each of their previous console transitions. With newer technologies like with AMD regarding Graphics Core Next and such, sure they'll learn some new stuff, but it won't be the drastic differences like it was with transitioning from Wii to Wii U. They'll use a similar architecture for the console when that launches later (albeit, more powerful) and they'll continue on from there. With combining their handheld and console sectors, they'll be able to asist one-another much easier as long as they remain consistant with their main goal. But, that doesn't mean that we'll see Mario Kart 9 for both Nintendo Fusion DS and Nintendo Fusion Console, because that'll limit the potential of sales boosts for both the console and handheld from the popular franchises, and I'm sure Nintendo wouldn't want to essentially throw away that free money. If someone buys the 4DS for Mario Kart, then they'll probably not go out and by a console for the same exact game with prettier visuals, so I think it's not a very good idea to have the exact same game (with performance differences) launching at the same time for both consoles. Mario Kart 9 for 4DS in 2017/2018, and Mario Kart 10 for the console in 2019/2020.

This idea of a "hybrid" handheld that "docks" to the TV (through a "console" that the handheld attaches to) doesn't make sense in my opinion. Unless they find a way to sell enough of these "hybrids" to compensate for their revenue of BOTH console and handheld sales (including games, systems, accessories, etc), that's not gonna happen, they're not going to kill off essential revenue streams. 

Costs a lot more? I don't know where you live, but not in the US. Wii U released $350, which is $50 less and a year early than any other platforms. Now it is currently $100 less. As for the Wii, it was $250 day one when the PS3 was $600. Maybe GC cost more, but that had more powerful hardware.

I would love to see some proof that Wii or Wii U "cost a lot more" lol.

Well, both of my options result in that. I figure you're saying both are good?

u misunderstood him

"its not much more powerful than your current system and costs alot more and we are not expecting half the multi-plats"

what he meant by that is Wii U is not a huge upgrade in terms of power compared to PS3/360 but costs $100 more and has less games being released so PS3/360 owners have little reason to choose own a Wii U, unless they are huge fans of Nintendo games.

Nintendo should ride the Wii U out, releasing as many new IP, until next gen starts. Show the world that Nintendo is more than just those franchises.  When next gen rolls around the corner, Nintendo's next gen system specs should be equal or on par with Sony & MS, and with Nintendo's new IPs that were released on the Wii U, gamers will have a new feel and anticipation to want Nintendo's next system which is what Nintendo is missing.

Nintendo needs to do similar to what Sony did.  When Sony was losing exclusives on PS3, Sony was like "F**k it, we'll just release our own new games then!" (Got kind of gangster there lol) So Nintendo needs to do the same since they're not getting enough 3rd party support.  Now gamers that pick up a PS4 have the sense of their existing IPs (ie Uncharted) but also have the sense of surprise for new 1st party IP (ie 1886 The order) because Sony does delivers.  Nintendo doesn't. (I can't say much about MS because I haven't play enough of their games but they're loaded so they can delivier whenever they want lol) I purchased my Wii U full well knowing what games to expect from Nintendo.  After I pick up Bayonetta 2, X, and a new Mario Party, that's all I see left of what Nintendo has to offer me because Nintendo hasn't brought enough new things for me to be surprised about.  Other games know full well what to expect from Nintendo too which is why some doesn't buy it.

So for Nintendo's next gen to be back on the same playing field as Sony and MS, they need to catch up on the specs and give gamers the sense of surprise by releasing new IPs now for the Wii U. That's just how I feel because if Nintendo still ends up being the same, then I may or may not pick up their next system because I know what to expect.

Easy. Make the Wii U a totally portable console.

Then basically do a beast Linux-based box that bridges with the Wii U Portable for some games.

Well yeah, I agree with that. I definitely think Nintendo dropped the ball when it was up to them to show off the Wii U holiday 2011 through most of 2012 timeframe. They could have shown something that visually seperated it from the 360/ps3 and got people excited, but they didn't.