I am not too sure about that. I think you are forgetting the Brand Name recognition part of the equation.

I mean, at this moment the PS4 has been riding almost on brand name alone. Sure, it has more powerful hardware and MS screw ups with the X1 launch helped it quite a bit. But at this point there is not much logical reason why it should be outselling its competitors BY THIS MUCH.

And the Nintendo brand on the other hand, we know that it is historically powerful but, I think it is nobody´s secret that Nintendo's installed base has been shrinking with each gen (excepting the Wii with its special circumstances) and I don´t want this to sound like like a DOOM thread, but I really think this is something they need to think about.

I'm pretty sure they do care about installed base, if it means more profit in the long run.  The boost from a price cut has to offset the cost.

Let's say in a good case, if Nintendo reduced $50 from Wii U production cost, then passed on the cut and reduce Wii U to $249, and then got a 50% sales boost (+2 Million users / year).  In that case they would need to make ~$100 profit per user to break even.

In a not so good case, say cutting prices to $249 meant eating $50 loss per console, and then they got a less optimistic boost of 25% (+1 Million users / year).  In that case they would need to make ~$250 profit per user because now they have to recoup the $50 loss, plus they have just half the boost.

The absolute worst case would be cutting the price and making no long lasting boost in sales.

So in short, it all depends on cost reducing the Wii U, ensuring that a price cut gives a good boost, and ensuring there are plenty of games to sell to turn profit from users.  Nintendo, or any big corporation, has models for this kind thing.

First, let me lead off by saying they do care. Second, I think there are things they can do about it and they know what those things are. However, you have to consider the position they are in, specifically the executives. The shareholders want *profits,* not install base. Iwata and company promised that and they *need* to deliver on that promise. That's why they are in hyper-efficiency mode. You will probably see more aggressive moves almost immediately after the end of this fiscal year. Nintendo's execs can't just do whatever they feel like right now; the shareholders are demanding results. It's not that they don't care about install base, it's that the shareholders have the metaphorical gun to their head and their hands are tied.

Install base is always important. Iwata referred to the GameCube as a failure in terms of sales, and he really did aim high with Wii, and I suppose they wanted that with Wii U, but they failed. Of course, they aren't a very large company like Sony or Microsoft, so they can't do something extremely crazy and afford to get away with it. But they are capable of doing it successfully, getting large install bases, like with their handhelds, but they've simply screwed up their consoles and unable to grow install bases to a significant amount.. If they stop screwing up their consoles (except for Wii, which was a huge success) then maybe they can go for a large install base. They could still do it without significant loses.

As for them focusing on short-term profits, I'm pretty sure Nintendo has stated multiple times that they're interested in the long-term.They've talked about how putting their games on iOS and Android were a short term solution, and weren't what they wanted, they wanted long term solutions.

Nintendo cares about installed base. The problem with Nintendo is that refuse to work with outside entities unless their vision is solely met. They will not create hardware with third party in mind. They expect third party to grovel and downport games to them. Nintendo wants 100% control when it comes to their product and anything on it. Hardware and format disagreements was one of the major reasons that lost them third party nearly twenty years ago. Once competition came around that was stronger than Sega Nintendo no longer had an overwhelming and unfair control over third party.

I have the same opinion.
They needed a smash bundle, a 50$ price cut this holiday.
but of course they would profit less, but of course they would sell more consoles. And in the future, with more consoles, mores games would have been sold.

I think the problem are the shareholders. They want an imediate profit. Not a sacrifice now for better gathering a year after. But after 3 years of losses, is kinda understandable...

Nintendo would sooner have profits right now than a larger install base. They are being carefull and don't want to end up like Sega. The install base will get there eventually and certainly won't be the lowest install base they've ever had. Game like 2d Mario and Mario Kart would really benifit from a larger install base but for many games it won't make that much of a difference. For example Smash Bros sold 7.07 million units to 21 million gamecube users and 12.32 million units to 100 million wii users. 5 times the install base but not 2 times the sales.  Similar numbers going from Mario  Sunshine to Mario Galaxy. Other games like  a Metroid and Zelda would be similar. And in fact I would expect Xenoblade Cronicles X to outsell Xenoblade. Zelda U will likely outsell Skyward Sword. Nintendo is trying to win back some of the fans it lost in the wii era and build on top of that and I think if they keep doing what they are doing they will do that and set themselves up to do even better next gen. I know i play my wiiu a lot more than i played my wii and my customer satisfaction level is much higher with the product. Nintendo is thinking long term. With more and more competitors on the horizon with amazon and steam boxes Nintendo is trying to bullet proof themselves by becoming more of a content provider again. If they continue to double and triple down on providing great Nintendo games they don't have to worry about competition because nobody else can make great Nintendo games.

Like it has been said, Nintendo cares about making a profit first and foremost.

This. Profitability is king.

Of course they do care very much but they also realize that their hands are cuffed. Interests in Nintendo's hardware and software are declining year by year. They made a trap for themself years ago by not investing in new IP's especially with realistic graphics. Sony did the opposite and look at the result: there are more than 14 millions PS4 sold in its first year destroying all competitors....