And waaay before vgchartz (and the wii), I was really scared that this scenario was going to occur!
I thought gamecube was a big-time (financial) failure, and that the gameboy advance was not that big (pokemon fad was fading fast!).

My, god... those were bad days... thinking nintendo would pull a sega (which was already tragic!)
Even EGM hinted at this in one article... I almost cried!

Yes, it would be bad, its about the whole experience. I still feel tainted for having played Sonic games on a Nintendo console, I feel like I'm raping Sega every time I push a button.
Seriously, it would be bad.

I'm amazed no one has stated this already.   The loss of Nintendo from the hardware side of the industry would be disasterous.

10 years ago, I would have said it wouldn't have mattered much, but since then they have launched the DS and Wii.

If you look at the NA market (and the same is true in JPN, not so sure about Others) the industry peaked in 2003!   After that the market was shrinking!   Why?  Because there was no innovation, it was the same games, over and over with more complicated controls, prettier graphics, etc.   It was stagnating.

For two years the market shrank.

Then Wii launched in '06 and the market made a slight rebound (PS3 & 360 helped).

In subsequent years the market DOUBLED in size.   In '08 the NA gaming industry was TWICE the size it was in '03.    That is almost entirely on the back of Nintendo's hardware openning up gaming to new people.

Portable gaming is a similar story with DS.

If Nintendo hadn't produced the Wii & DS where would we be now?

'06 would have seen a slight increase over '03 with new system launches but then it would have further retracked and shrunk.  Think about it.  You had a choice of a $400 system or $600 system both of them almost identical in everyway (except PS3 has a blu-ray player).   How would that grow the market?   It wouldn't.   The problems that led to the market shrinking in '04 and '05 still exist today on HD consoles except they are even worse now due to the high cost (and risk) of HD gaming.   How many studios have cut studios, cut games, cut new IPs and everyone is now looking to focus on fewer, better games.    Fewer games, and a lot less innovation would only cause more shrinkage in the industry.

Without Nintendo making hardware gaming would not be gaining mass appeal, it would be becoming ever more the 'nerd gamer' industry, much like the comic industry is stuck selling onto to a small market despite having properties of massive mainstream appeal.

Without Nintendo making hardware this industry you all love would be continuing to die a slow death.    

Gamerace I think that market shrinkage (at least in terms of hardware) is just a normal part of the console cycle. You'll probably see the market for this gen peaked in 2008, 2009, or 2010.

Right Nintendo hardware is created for the software they create. So now you would have them force to develop their games. Based off someone else systems. Think how the N64 and Mario needing analog. The first playstation and saturn controllers. Didn't have that so a game like Mario 64 out of the question.

A reply someone's list of Nintendo innovations. Also the first great working wireless controller aka wavebird.

Considering both Sony and MS consoles are pretty much using a modified version of Nintendos original controller designs as well as a lot of other 'barrowed' items, there's an argument to be made that if Nintendo dropped out of the Hardware business, the console industry would lose a large chunk of its starting innovation.  Not just the 'waggle' controller or the basis of new markets like 'casuals', but entire new revolutions in controller, console and handheld design.  And perhaps even new ideas Nintendo has yet to introduce that will completely change the way we play games beyond the basic console/handheld standards.