Uh, well actually the XBox brand finished pretty strong that first generation with Halo 2, the XBox was even outselling the PS2 for some months as that generation went on. 

So I don't think anyone was thinking the XBox 360 had no chance. And when Sony said 599 ... that basically created the opening for MS. 

Nintendo I don't think is even playing cards anymore, lol. They're off in the corner playing with their own LEGO blocks and checking in on MS and Sony who play cards once in a while. 

Uh, well actually the XBox brand finished pretty strong that first generation with Halo 2, the XBox was even outselling the PS2 for some months as that generation went on. 

So I don't think anyone was thinking the XBox 360 had no chance. And when Sony said 599 ... that basically created the opening for MS. 

Nintendo I don't think is even playing cards anymore, lol. They're off in the corner playing with their own LEGO blocks and checking in on MS and Sony who play cards once in a while. 

(..)

"Still, I am not sure if the form factor (the size and configuration of the hardware) will be integrated. In contrast, the number of form factors might increase. Currently, we can only provide two form factors because if we had three or four different architectures, we would face serious shortages of software on every platform. To cite a specific case, Apple is able to release smart devices with various form factors one after another because there is one way of programming adopted by all platforms. Apple has a common platform called iOS. Another example is Android. Though there are various models, Android does not face software shortages because there is one common way of programming on the Android platform that works with various models. The point is, Nintendo platforms should be like those two examples. Whether we will ultimately need just one device will be determined by what consumers demand in the future, and that is not something we know at the moment."

That is an early NX quote from Iwata.

I have to disagree.

Nintendo is more than capable of competing with Sony and Microsoft and leveraging its brand to take a chunk of the market. This is Nintendo. - They are the Disney of Video games in essence.

Besides, it isn't like Sony, Microsoft and Nintendo are designing the chips that are inside of these boxes, they are taking semi-custom/vanilla designs made by AMD/nVidia/IBM, packaging it nice and neatly in a nice looking box and whacking a sticker on top and calling it a day.

However, by Nintendo not having competitive hardware that allows for the easy porting of big AAA titles like Battlefield, Call of Duty, Elder Scrolls etc'. Then they are loosing out on millions of potential gamers/customers... And even advertising.
When was the last time you saw a AAA title advertised via video or poster that was available on the Next-Gen twins which also said "Also available on WiiU?" - That is advertising Nintendo looses out on.

Nintendo can be competitive and still remain successfull if it plays it's cards right. - No one thought Microsoft would be able to take as much of the market as it did from Sony with the Xbox 360, especially after the original Xbox, but they did it, if Microsoft can do it, you can bet the farm Nintendo can with things like Mario and Pokemon.