Nintendo has more than just one issue effecting why they aren't a bigger deal within the video games market.

Personally I will be picking up a Wii U eventually, probably when Starfox releases (hopefully later this year), but hardware performance is only part of their issue.

The main problem is that Nintendo doesn't target the 3rd party audience with their games, they need new IPs for the market between casual and hardcore.
They lack titles like Uncharted or Gears, GT or Forza to get those gamers interested in their platform.

They don't have a comparable online network and they don't seem to do in-game voice chat for those gamers.
I can understand protecting younger gamers, but a built in age rating system and only allowing age appropriate people to use Voice chat would prevent any problems from happening.

If Nintendo had capitalized on their early release of Wii U, with a more powerful system, that had desirable games targeted at a bigger audience than their core customers, with a quality online network for multiplayer they could have had the market too themselves.
It mainly comes down to the games, they have to be made for the audience that buys 3rd party, Nintendo could still make the Mario, Kart, Smash, Pikmin, so on and they would likely end up selling even more of those titles because some 3rd party gamers would probably be tempted back into trying them out, not to forget that those games would look far better graphically because Nintendo has put more powerful technology inside of the box and that would only appeal to more people.

Personally I hope NX is a family of systems, with one of it's platforms being a powerful games console because Nintendo could very well put themselves back into poll position and an Apple like approach to the video games business would make them flexible to react to the next generation of consoles from their competitors coming into the market.
That kind of an approach may also end up being interesting to 3rd parties, provided they ask them what level of specs and kind of architecture they want, along with providing good developer support to external publishers.

Nintendo needs to deal with all of their issues based on what the market wants, not what they think people should have, otherwise this is just going to continue on into the future for Nintendo.

I'm amazed anyone has dared mention Watchdogs as it instantly brings into mind the absolutely terrible wii u version which shows it can not even compete with ps3 or 360. Watchdogs needs to stream in a lot of data, not a problem on just about every other console or PC that has a hard drive but on wii u it massively struggles supplying data from optical. Then there is clearly the cpu issue with horrifically low frame rates as the graphics get more complicated and while likely a this is cpu related rather than gpu it shows how under performing the wii u is.

The PS4 is an absolute powerhouse compared to wii u and if Monolith did a version of Xenoblade for it, it would be utterly breathtaking and amazing what they could deliver with 1.8 teraflops of graphic performance. Huge upgrades all around with not much in the way of compromises. Even the original wii version emulated on pc at 1080p 60fps looks amazing.

The wii u has yet to deliver the wide spectrum of impressive games visually that both 360 and PS3 have delivered and where games are available for all three consoles its only a few 2D games and Need for speed most wanted that show wii u marginally ahead. There must be something like 15 resource needy games that perform at higher levels on ps3 and 360 to wii u.

I love gaming and own ps3, 360, xbone and ps4 plus wii u and for me the wii u is definitely technically last so far. I don't want it to be, I would love to say otherwise but sadly I'm just not impressed with what I see. Don't get me wrong I can see some games have great graphics and you can see its later feature set means some nice graphic effects but much more has been achieved with ps3 and 360. I wouldn't even dare to compare wii u with ps4, xbone or pc when it has yet to match 360 and ps3. That's the way I see it so far. I am so glad to see Xenoblade X it really delivers a performance level I've not seen on wii u before but it is only one game.

Yes, even wii u's graphic is fine for me already. And I don't mind if it gets better.

Well XB1 owners seem to be fine with it so why not.

*Insert many apologies and reiterations that that was not a serious comment*

OT: If I was a Wii U owner I would maybe be okay with this, as I play on a 1080p monitor that's quite close to me 720p looks very fuzzy but there's nothing wrong with the Wii U's graphical output, Nintendo do amazing things with it.

As for graphics go, the wii u has shown that can give us next generation graphics that look fine even today, but obviously the scale is not going to be the same as xbox one or ps4, I think iwata went to far with the low specs, as if he was obsessed with the power consumption of the system, but i think iwata understimated how lazy companies would be in this generation and that they would invest almost no penny on optimizations

Lets hope next time iwata wont mess up things

Technically Wii U can stream from hard drive; Xenoblade Chronicles X does this.

And since pretty much every multiplat was designed with PS3/360's hardware in mind and the ported (Often by second tier teams) to Wii U's different architecture, it's hardly surprising that performance suffers. Especially when you consider devs had 6-7 years more experience with PS3/360 than with Wii U.

And you missed Bayonetta in your list of games that perform better on Wii U. :p

As opposed to 1080p at 30fps?

PS4 level graphics at 720p 60fps is all i need.

I think the Wii U has the best looking games of this generation so the Wii U is already enough for me.

Not every wii u owner will connect a hard drive and usb 2.0 doesn't match the bandwidth of sata. I installed skyrim on a 360 usb stick and the load times were absolutely terrible compared to the 360's tiny 60gb hard drive.

Your second point is makes no sense.  The games that were developed for wii u were often developed by the same teams that developed the ps3 and 360 versions. The processor architecture is the same, powerpc and the radeon graphics well documentated. No matter how much you try to work around it there are only 3 dated 32bit processors in the wii u running at 1.25ghz. This delivers pitiful performance c ompared to even ps3 or 360.  Let's not forget either that ps4 and xbone have moved to 64bit processors so their mips rating is based on the ability to process 64bit chunks of data at a time, not always required but where code is optimised to use 64bit every instruction they can process twice as much data, hugely significant.  As mips is just a crude benchmark for how many millions of instructions are processed per second it clearly underplays the ps4 and xbone's huge advantage over the older generations 32bit processors.

The reality is many people don't understand graphics enough to determine how much processing is required underneath to generate them and this seems to favour Nintendo who produce very pleasing to look at non-realistic graphics of a cartoon style. However a simple technical check of the console itself, the low performance components, the power hungry older fabrication process but low actual power consumption and of course the very low bandwidth memory chips give clear indication of the wii u's performance level which fits perfectly with what the wii u is actually delivering in gaming performance. 

Even Xenoblade X if think about what they deliverd on wii and then think how much better the resources are on wii u, 5x wii cpu performance, 30x wii memory capacity, 15x wii gpu performance etc its no surprise they have managed a 480p to 720p upgrade with much enhanced textures and draw distance.

As for Bayonetta 2 I thought that was a relatively simple on rails hack and slash type game. Not the sort of game that pushes hardware because the gameplay is relatively simple. It's not my sort of game, same as smash bros which is another game I don't play.  I played the original Bayonetta a bit on 360 and hated it. However even if this game had absolutely amazing 1080p 60fps graphics on wii u its still not the sort of game that is going to require much in cpu resources surely. I remember the original xbox had some absolutely stunning on rails games for its time that its open world games could not match.  Open world games are far more significant in analysing console performance levels as they are hugely more resource hungry.

Wii U can and does stream from hard drive to alleviate loading and streaming issues in Xenoblade Chronicles X.

Also, you're overlooking PS3 and 360's problems that Wii U does not suffer from; the much smaller RAM and more outdated GPUs of both, the much smaller eDRAM in 360, the split memory pool in PS3.

But let's hear what a developer has to say...

http://www.nowgamer.com/wii-u-is-a-truly-powerful-console-more-powerful-than-360-and-ps3-trine-2-dev/

"The console is definitely more powerful than the Xbox 360 and PS3.” - Julius Fondem, Frozenbyte.