This is just my prediction but I can totally see it, and this is removing my personal feelings about this move out of the equation. Reasons:

1.) Nintendo is simply much better at making games than 99% of the drudge of the smartphone market. Even their little mini-games in Mario 64 DS like this one are better than like 99% of smartphone games:

Simply put, Nintendo entering this market is like a hungry lion entering a savannah with antelope all over the place -- this is going to be a slaughter. There's no Sony/MS to compete with here or other 3rd parties top tier studios (just their D-tier studios that fart out smartphone apps with little to no quality control). Even Nintendo's B/C tier efforts will stand out as better than the vast majority of smartphone games. 

2.) Nintendo's DS experience (and Wii U to an extent I guess) has prepped them well for making touch-only games. Not just Nintendogs, but they made touch only Zelda games, Kirby games, Animal Crossing can work touch only, Advance Wars can be touch only, Fire Emblem, Wario Ware, etc. Other IP like Punch-Out, Mario Party could likely be adapted easily too. A lot of the groundwork has already been laid in other words. 

3.) Amiibo can work on iPhone/Galaxy/iPad

Since most new smartphones/tablets have NFC functionality, all these toys could work with them with no extra hardware needed, you just need a Nintendo Amiibo app, and voila. This could Nintendo access to millions of kids. Scan your amiibo into your iPhone 6 and bap you get a new level/game/character/mini-game. You get the idea. 

4.) Smartphone gamers love cartoony games. In fact candy colored games are to iOS/Android what the grey-space-marine aesthetic has become to the home console. Maybe it's the smaller display that makes colorful games pop and more easy to follow or that people just want more bite-sized/friendly experiences on the go, but Nintendo is the king of this art style. They don't just have like one IP like Angry Birds, they have a whole treasure trove of cartoony IP. What works against Nintendo on home consoles will work for them on iOS/Android. 

5.) The NES/SNES/N64 generation that grew up -- they all have smart phones. They are going to totally bite on cheap/F2P Mario/Punch-Out/Zelda/Pilotwings/Pokemon. They may not be willing to buy a Wii U or even a 3DS ... but they all have an iPhone/Galaxy/iPad, but free from the burden of selling hardware, Nintendo could kill it here. There are a ton of Mario knock offs on iOS alone, now that the real deal might be coming ... look out. 

NOTE: While I'm not stoked about this as a gamer, I can't deny the business ramifications here. 

It's very possible, their ip's are strong and aslong as the games are good I don't see how they couldn't be one of the biggest if not THE biggest publisher for smartphone games in a few years time. If they're that successful hopefully they don't start putting their focus on smart devices...

They could start by bringing Pokemon Shuffle to mobiles. Those games get decent profits on mobile, and Pokemon is still one of the most recognisable brands of the videogame industry.

They should definitely be up there, they have all the potential to do so and it doesnt have to negitively effect their dedicated console business either. Right now I think they will start off overly cautious but when they start to see the true potential of this they will ramp up production.

They have plenty of titles that would work in a mobile environment, so I think they will do well. And who knows it could very well work in favour for Nintendo's platforms. It has become pretty apparent that Japan is pretty much lost to the mobile gaming market, so they do need a presence there to survive and if they can get DeNA to create quality titles from their IPs it could create a desire in those gamers to return to dedicated gaming devices.

They just need to play their cards right, and not release games that people actually want on mobile, just ones that have characters from games people actually want.

II see to happen...

I don't know if it's as much like a lion being unleashed on an antelope-filled savannah as it is a gourmet chef climbing down into the sewers where the mutant mole people can't distinguish between Angus and anus. But maybe there are more discriminating mobile users than I think there are and it isn't all one big race to the bottom hellhole.

Well, it certainly doesn't sound like they're half-assing this. I'm interested to see what they come up with.

I think Iwata sees mobile devices as an entirely separate medium from gaming devices. Similarly to they way they are seeking partnerships with Sony and Netflix for film and television based on their IP, they are partnering with DeNA to bring their IP to mobile. It isn't redundant alongside their Wii U and 3DS offerings, any more than the Pokemon Trading Card Game is redundant alongside the video games.

He's been saying for years now that he thinks the mobile market is less of a competitor with Nintendo's products and more of an opportunity for them to spread awareness and expand their business. Until now this didn't include making games for mobile, but I think he has recognized that there is demand for mobile games and that they can exist independently from games for other hardware. Nintendo has no plans to make phones, so in order to get into that medium they'll have to partner with another company and release games on someone else's hardware. The same way they have no plans to create their own film studio, so they have to partner with Sony to make movies.

To be honest really, I think people are underestimating how many of Nintendo's popular could be done reasonably well even with no buttons. Off the top of my head I got

Mario Kart (many people prefer tilt controls)
Animal Crossing
Legend of Zelda (DS-style)
Tetris Attack/Pokemon Puzzle League
Pokemon RPG
Kirby Canvas/Rainbow Curse (series)
Nintendogs
Style Savvy
Brain Training
Fire Emblem
Advance Wars
Wario Ware
Mario Party
Mario Vs. DK

Punch-Out!, Paper Mario, etc. could also work. 

It's not just "lol, they'll make one crappy Pokemon puzzle game" ... they could legitimately release some pretty decent games.

nintendo smarthphone games >>> better sales than nintendo consoles (games) in japan in the future.

all casual player play it on smarthphone then. and EA + ubisoft coming NOT back to the new nintendo console.

the new nintendo-smartphone-politic is bad for fans.