Why? There are a lot of excellent games on the WiiU. I'm sure in a couple years the WiiU will have a similar fanbase as the Gamecube. They will abandon the Wii name, though. Maybe all of those Wii something games will continue, but the console won't be related to that brand anymore.

Even better: Nintendos Wii U game is neither over nor lost.

They just learned how to exploit the hardware power which the Wii U offers. And thats plenty compared to the Wii. 

Now they are going to learn how to exploit the power of online and social. They've already learned how to generate buzz and hype in the changed "attention landscape". But that only on the marketing side.

Just imagine what those people who invented games like Animal Crossing can do when adapting their skills onto online and social by utilizing the unique capabilities they have on the Wii U thanks to the GamePad...

For those who can't follow those thoughts: take a break and visit the MiiVerse to look at the user generate contented within the "ArtAcademy SketchPad" forum - it speaks for itself...

Two ways for compatiblity:
Hardware: Have Wii 3 an actual SoC with Wii U CPU and GPU.

Software: Emulate PPC and GPU. If the triple core PPC in the Wii U is as standard as most think it actually isn't that difficult to emulate. It might need much CPU-power to emulate it with enough speed though.
The really challenging part would be the GPU. WiiU has likely a design based on Redwood or even RV730. AMD has already made a completely new GPU design since then and that basically means there might already be compatiblity issues.

As for a Wii U on a chip, it would cost money but could possibly be done pretty cheap with a future manufacturing process like 14nm.
Softwareemulation would cost some money as well in development. And need fast enough hardware.

me thinks it is time to drop backwards compatibility.

Why would you prefer a console with less options? Backwards compatibility instantly opens a whole library  to a console, it's like having two machines in one.

They should and probably will drop it. I'm no expert but I presume backwards compatibility will come at a cost, and probably no benefit.

- Wii U had backwards compat to help carry over the 100m wii audience, especially because ever green titles like wii sports/wii fit.

-Wii had gamecube compatibility because it was 2 gamecubes stuck together.

Nintendo's home consoles have not had a long tradition of being backwards compat, again the last 2 systems had very obvious reasons to be. I presume they will resort back to the Gamecube, N64, SNes days of no BC.

Moving forward Nintendo have nothing to gain by making their next system backwards compatible. Smash and Mario kart will get their piece of the pie as they always do each making previous entries obsolete, Zelda Wii U can be remastered and re-released alongside X and everything else will naturally be forgotten or replaced with a sequel.

Plus this way the Wii U/wii can live on as archive machines. Between them you've got Nintendo's whole history in terms of MOST notable releases.

There is no Power architecture successor at the performance, cost and power levels required to make it the main CPU for a new Nintendo console. Including it as a second chip would be very expensive as die shrinks are a lot slower than previous generations. And at the power envelope Nintendo is targeting, emulation is unlikely.

So, They'll drop the backwards compatibility. It didn't help Wii U, and Wii U owners will buy the successor regardless of backwards compatibility. I think it's the right decision to drop it.

I expect Nintendo to use AMD ARM, not AMD x86.

If they change the architecture, backwards compatibility will be gone. I mean it would be possible, but I don't think Nintendo could pull it off. You would need really strong hardware together with some serious software engineering. I don't think Nintendo has the know-how, nor do I think they would spend much money on it.

Might be the case - but not in 2016. At some point in time they will drop BC if they are forced to change the CPU architecture and the new one isn't fast enough to emulate the PowerPC...

the Wii U has a lot of live in it as Iwata said: Nintendo won't release a new console until they have satisfied the Wii U owners.

And their is nothing other than Nintendos own capabilities which hinders them from making the Wii U more successfull by reaching new audiences. There are tens of  millions of Wii owners still waiting for Nintendo to give them a reason to buy a Wii U...