I think Nintendo fans sometimes really understate the Wii U's problems. This isn't a "oh it just had a bad launch". The PS4/X1 didn't exactly have great software libraries from launch either, the difference is people actually wanted those systems. Pikmin 3 coming out 2-3 months earlier wouldn't have saved the Wii U.

What kind of games do people typically buy Nintendo systems to play? Nintendo games, obviously, since they have only token third-party support (Just Dance was the only third-party game to have any sort of impact on the Wii, and it's certainly not AAA fare). What first party games did it have by the end of Q3 2013? New Super Mario Bros. U, Nintendo Land, and Pikmin 3.

Now what kind of games do people buy PlayStation and Xbox systems to play? All the big third-party AAA games, as well as some AAA exclusives. They had CoD: Ghosts, ACIV: Black Flag, Battlefield 4, NFS: Rivals, and all the major sports games (FIFA, NBA 2K, & Madden) at launch, with Killzone 4 & Knack for the PS4 and Forza 5, Ryse, & Dead Rising 3 for the XBO being the big launch games. So right at launch they outclassed the Wii U in the software department. In Q1, they got MGSV: Ground Zeroes, Thief, and Tomb Raider: The Definitive Edition, with Titanfall and Infamous: Second Son being the big exclusives. Last quarter they got Watch Dogs, Wolfenstein, Child of Light, and Murdered: Soul Suspect from third parties, while the PS4 got MLB 14 and FFIV: A Realm Reborn as exclusives. This quarter we got Destiny, Diablo III, Madden, and FIFA 15 from third parties, with The Last of Us: Remastered and Forza Horizon 2 being the big exclusives. The Wii U wasn't even in the same ballpark as the PS4 and XBO, so to discount the big first-party drought for a system that, like its predecessor, was utterly dependent on first-party output to bolster its library is to be more than a bit disingenuous in saying why the Wii U is struggling. Once lost, momentum is almost impossible to rebuild.

Nintendo just made a system no one asked for.

Or maybe they made a system that was poorly marketed, had a gimmick that was a tough sell (largely a corollary of the first point), and didn't have the games it needed. I believe that a system's performance is explained primarily by games, pricing, and marketing. History shows that systems that suceed on those merits succeed in sales.

If they want to make a system third parties will develop for then they basically will have to swallow their pride and let third parties basically tell them which GPU/CPU/hardware features they want, something I think Nintendo is still too stubborn to do. 

If they could release a Playstation 5 (as in FIVE, not FOUR) class system approved by 3rd parties and get a 1-2 year headstart, maybe they could gain some traction there, but I don't think they want to do this.

I never said they will go this route. But I am saying they should go this route. It's a safer bet than going for a Wii 3. They ought to know by now how important big AAA third-party games are to fill in the gaps between exclusives, especially if you end up with a gap that lasts 8 months. I think that had the Wii U being a conventional system on par with the PS4 and XBO, it would be selling quite well right now as it would have the third parties developing for it. If you build it, they will come, third parties and consumers both. It wouldn't have been another Wii sales-wise, but I think if it had Assassin's Creed, CoD, Destiny, Final Fantasy, the inevitable GTAVI, and other popular third-party games to complement its first-party output, it could have been competing quite well again the PS4 and maybe could have pushed the XBO to near-irrelevance even in the U.S., which has historically been relatively Nintendo-friendly.

I don't think Nintendo has the capability to support two machines anymore. It's just blatantly obvious this generation. Having two distinct platforms especially with rising development costs (even for portables, the days when they could just port SNES games or use N64 level graphics are long over, handheld games require a lot of time and dev power now too) is an unworkable situation for Nintendo. Even Sony really can't make it work, they can't support the PS4 and Vita simultaneously, they basically need third parties to carry the Vita. 

It's not 1989 anymore, it's not even 2006, supporting two hardware platforms today requires tremendously more resources.

No, you simply assume they can't handle two systems. Comparing the situation to Sony's situation is a non sequitur. The Vita isn't struggling because Sony couldn't afford to make it work. The Vita was just a big misstep. For one it is too expensive (esp. when accounting for hidden costs like memory cards; at launch the system + a 32GB card would run you $400, extreme for a handheld even when accounting for inflation), not to mention it was poorly marketed (did it ever even have any commercials?). I've also heard some argue that it was possibly too big of a leap in power for one generation (it's a total beast spec-wise compared to the 3DS), and like the Neo Geo was too powerful for its own good (the Neo Geo priced itself out of contention as well due to being far more powerful than the SNES and Genesis).

The bolded games are the ones I consider big excluesives.  The rest are simply exclusives that supliment the lack of good 3rd party support.  Notice how your list is split between two systems?   Also keep in mind this list is not indicative of an average year for Nintendo.

If anything you cemented my stance that they can only support one system effectively.  It is becoming more and more clear every year that if Nintendo truly wants to cling to this business plan of -  "You must buy our inferior hardware if you want to play our specual games!";  then have to make it so Nintendo fans only need one console to play their "special" games.

Out of those I'd only say the bolded are 'big exclusives'. The others are smaller games that aren't going to have anywhere near as much impact.

Even in the handheld space Nintendos market from DS to 3DS has gotton smaller it seems.

So why do you think Nintendo would make another console? (If you do think they will, if you think they shouldnt you can also post why).

Wouldnt it be much better for them to make the rumored "Fusion" Handheld Console hybrid? would Nintendo not be more successful and make more money by doing this? also wouldnt it be better for Nintendo devs to focus all their dev time on one platform getting what they can out of it?.

also (Judging by other Nintendo handheld sales) if it sells well enough and outsells the other consoles Nintendo can still say they are winning since it will be a console also in a way..