Though often praised, the SNES was one of Nintendo's biggest mess-ups. From the user end, it seemed like a great idea: a much-needed upgrade to the capabilities of the NES in a new system to compete with the Genesis and TG-16. Who would complain about that? Besides the ones who didn't want to buy yet another console, of course.
But from a business perspective, the "Super NES" was probably the worst thing they could do. It meant acknowledging their competition's claim to the market was worth addressing directly, instead of doing what they'd done with the Famicom/NES: remaking the market in their image. And worst of all, they opened the door to big competition by not remolding the market again, meaning Sony and MS came in and almost undid them. Let's not mince words, Nintendo's portable near-monopoly was what kept them afloat above all else during the years of Sony domination. Their home consoles couldn't compete, and though they didn't generate a loss, they didn't generate a significant profit, either.
I think things would have been very different indeed had Nintendo decided to change the market around back when the Genesis was invading the market, instead of playing the competition game like they did. We may well have seen the Wii's equivalent controls emerge as mainstream long before they did...