I'm questioning whether it was good for the industry or not.  I dont think it was.  Just because Nintendo is doing well doesnt mean the industry is doing well.  Making a console so completely different from the others made software developers have to focus on 2 completely different setups.  This was not a problem last gen with all 3 consoles being very similar, where only minor tweaks needed for each console.   Now I am not saying that Nintendo is completely to blame here,  alot of these developers made bad decisions with game development.  I am just saying that Nintendo can also be blamed despite their financial situation being as good as it is. 

If Nintendo had done what everyone else was doing, how would it make all these companies profitable?  It wouldn't.  The industry would just be losing even more money.  It would be even worse for the industry.

How is giving the industry more customers than it's ever had before bad for them?

The industry would lose even more money or even get worse?   How,  for starters you wouldnt see all this shovelware crap being pushed out left and right.  Not to mention those high budget games that people claim are destroying the industry, the ones that alot of Nintendo fans want but seem to refuse getting a console that actually has them, would probably then get releases on Nintendo platforms and see good sales from it as well.   Selling to a bigger install base would make reaching profitablilty much easier to achieve. 

They may have lost a lot of money (for various reasons including the economy) but did they go bankrupt? No they did not. Are they still in a position of power in the market place? Yes they are. Has the market lost some poorly ran competitors freeing up the market space for companies like Sony to capitalize on it? Yes it has. 

Well maybe for starters that the industry is hurting pretty bad right now?  

Dont get me wrong adding new customers are great, but are they the kind of customers that keep the industry alive and kicking by constantly supporting it and buying new games on a regular basis?   No, they arent

This is not terribly on-topic, but how is Sony in a position of power in the market place? They have a minority of market share in every significant market segment... TVs, gaming, phones, music players, you name it.

Fun fact: Wii's software attachment rate is on par with the PS3's. 

Big companies fall, and they fall hard. Look at Atari, Sega or the now defunct Midway... it always happened, and the game industry still went on. its not dieing, its simply changing, and thats the way it should be

Shovelware isn't the problem.  As despicable as the practice is, they spend so little money on development that the initial shipment is able to make a profit.  It is the big budget stuff that fails to live up to sales expectations that are the problem.

How would the industry be losing even more money?  If you take away Nintendo's profits, and replace it with what Microsoft and Sony have been doing (big losses), there is no way a third console to port a game to will make up for those missing Nintendo profits and it will not bring third parties to profitability.  Besides, if Nintendo had gone this route, they would not have sold as many consoles, so the install base wouldn't be that large anyway.  In fact, the total number of consoles sold up to this point would likely be much lower.

Did you pay attention to the article, or are you just ignoring it and hoping it will all go away like most people in this thread?  The process of ever increasing development costs coupled with relatively stagnant game prices results in decreasing profit margins.  The same thing has been occurring for years and years and years.  The only difference this gen is that those profit margins have finally shrunk so small that they are now negative.