Nintendo should probably reconsider its direction, especially in portables, but I don’t think this is where it should go.
As much as I’d like to play some Nintendo classics on my iPhone, I also don’t think Nintendo should give up and go the route of Sega. Apple was in the same position when they were faced with the decision to abandon the Mac platform in favor of Windows, however, Apple recognized that something needed to change, that they needed to innovate somewhere—instead of just blaming this or that for all their problems.
If Nintendo would be a little more open-minded and understand that in order to stay relevant, they need to really rethink their business, then I think they could pull through and continue to be successful. But if they are still awe-struck by their previous successes and refuse to innovate further, then I think they’re gonna end up on the same path as RIM and Nokia.