...but didn't they make a lot of money with the Wii and DS? They sold like hot cakes (a combined 250+ million, I mean, holy shit), were profitable from the start, and Wii games weren't nearly as expensive as HD games. So... what's with this argument? Shouldn't they have a lot of money now, to try and estabilish a strong installed base for a more traditional, powerful console? Not as much money as MS, but probably more than Sony right? Especially before the PS4 released?

What did they do with that money? Or am I full of bullshit here?

nintendo is actually a larger company than Sony, and both are insignificant specks compared to microsoft. i dont know why people have a hard time understanding this.

edit: it is like comparing earth, venus and the sun. 

The investors go crazy whenever they take losses, and for good reason. Gaming is Nintendo's only business, and when they lose money through gaming, the entire company suffers, whereas in Sony/MS's case gaming is only a small part that doesn't affect the company as a whole.

This idea reminds me of that scene in Jumanji where the kid runs to the shed to get an axe, but the shed is locked so he grabs an axe leaning against it and starts chopping down the door.

lol i dont know if gaming is really just a small part of sony's business anymore

Gaming is still a spec of Sony's business. Camera sensors, and financial are still over half of what Sony is. That is why Sony is trying to expand the PlayStation brand with PlayStation Vue and PlayStation Now. They want to make more money from games, so they can put more money back into games.  

i guess that is good for them. but what youre saying is that they are trying to make games more of a central focus of their business?

Sony isn't the problem. I think Nintendo would be OK with competing with Sony.

Microsoft is where they get the problem. Because it would be one thing to just compete against Sony, which is a much smaller company than MS, but when you have two already doing the same exact thing more or less, then Nintendo trying to butt in and be the third just comes across as hopelessly "me too".

And Microsoft has had in the past no hesitance to turn things into a pissing match over money.

MS just overcrowded everything too much.

MS has some sort of infinite war chest, yes. But quite frankly, in 3 generations, I never saw this changing things DRAMATICALLY. They made GTA4 and FFXIII go multi-platform (...which was pretty huge I guess), and got the deal with CoD (which they lost already) but I don't know, it seems to me Nintendo is perfectly capable of competing.

MS got timed-exclusivity on Tomb Raider and Sony (with less money than Nintendo) got the same deal with FFVII and full console exclusivisity with SF5. Nintendo could surely do something like that too, and they have the benefit of really strong first-party IPs. Regardless, it's been proven that the consumer wants just traditional gaming consoles. That's it.

Nintendo is much smaller than Sony.  It's really not even close when comparing assets.  Nintendo has simply been much more profitable, which is entirely different.  

On topic, Nintendo can and always could compete, they just chose not to do so, believing the power of their own brand was strong enough to win through.