Certain aspects of Nintendo and how they've done things since the N64 have been baffling, but then they certainly have still made plenty of money despite what many of us feel about their attitude to hardware and software developments within the company over the years. My own personal feelings about this from someone who is admittedly a lapsed Nintendo fan are:
1. The third party support issue. It's been varying degrees of weak since the N64, but they've never seemed to successfully get this issue resolved. I'd say the Gamecube was about the closest they came to resolving this, possibly as it was sort of like-for-like with the PS2/Xbox, but even that had some glaring misses (here's looking at you GTA games). I know many will trot out the buying for first party games only line, or second console defence but that just doesn't sit with me. I know of many one console per generation type households, and last gen for the first time ever became one of those myself. There's no getting away that poor third party support is an issue that should be addressed.
2. They how did they miss this one?
2.1 The FPS. The N64 had some stone cold classics despite some of the abuse that was thrown it's way during the often barren spells between releases. Two of those classics pretty much sparked interest in an entire genre for console gamers, Goldeneye and Perfect Dark. That's right, Nintendo hardware and exclusives pretty much defined the FPS on consoles before Halo took up the mantle with the Xbox release. Sure there were FPS games on the Playstation, but every single Playstation only gamer cast an envious eye over to those Rare classics and wished they had something of that quality on their system. We're now three home consoles on and Nintendo have never appeared to address the sales losing those. You could possibly claim the Metroid Prime series, but that always played like an Adventure game with an FPS perspective than a true FPS.
2.2 Race me.The Gran Turismo affect. Microsoft knew from day one they had to counter the new kid on the block of driving games on consoles that was Gran Turismo. Every N64 magazine back in the day touted the next driving game 'GT Beater' that never arrived. Nintendo just ignored the entire bloody thing.
2.3 Diversity. The N64 Nintendo software published list looking back appears more diverse that what we are offered now. We had 1080, F-Zero, Wave Race, Starfox, Excite Bike, Killer Instinct, Blast Corps etc. I can only assume that they believe there are no money to be made in titles like this or resources are better spent on other projects, but this lack of diversity is another issue for me.
I hope the Wii U is a success, but I think we're looking at a Gamecube scenario sales wise, maybe even worse than that. I'm willing to be proved wrong but I think Wii U Fit will bomb, that ship has sailed. There is no buzz about the Wii U like there was for the Wii. As much as some gamers hated "waggle", the public at large were amazed by it. Many tired of it quickly and there are no doubt a good few consoles covered in dust no longer used, but for a couple of years it was cultural phenomenon. I'd even go as far to say that I think Mario Kart will do little more than shift a few extra units to the old Nintendo fans that haven't jumped on the Wii U train yet.
To entice someone like me back they need to address some of those issues I've raised. I love Nintendo games, but I also love sports games, and realistic racers and a good FPS. I've never seen how you have to be one or the other. I also know like last gen that this gen I'll pick up one console and that'll be it. I'm in the undecided camp and won't be day one for either the PS4 or Xbox One. The Wii U is still an option for me, but not if Nintendo carry on as they are even if I would really like to play Pikmin 3.