All Nintendo has to do is build in a multimedia player in a new gameboy, give it sleek design and compete on the MP3/4 player business. I don't know if they can outsell Ipod, but I think they could become the no.2 brand.
Or they could set up a anime producer and make animes of zelda and other franchises. That way, they could cooperate with disney to establish a solid place in the market.
And if they build a phone in the DS, they would gain even more sales in the Japanese market, watching the popularity of the DS and the endless possibilities of mobile phones in Japan.
So, that are three branches Nintendo could easily reach by EXPANDING the thing they already do so great: making games!