Yup. This may be the worst major launch ever and it's not over: this will continue until November when every system gets a boost due to the holidays. The WiiU is effectively finished, you can't fix mindshare and negative customer perception quickly...and by the time it evens out the next gen systems will be out.
You're wrong. Nintendo have turned things around before. Everyone I've spoken to is extremely happy with their system (except for the lack of games) so it's got good word of mouth. There's nothing wrong with it except the OS which is improving and will be fixed (but currently still allows you to get into games faster than an xbox!)
It really comes down to: Do Sony or Microsoft have their shit together for Christmas? My gut, going on past launches is it probably isn't going to be that great. Launches never are.
So potentially what we could be getting here is a WiiU (with a fixed OS) and a price cut, going against full price Sony and Microsoft, who may or may not have a decent launch line up. Nintendo will probably have a 3D Mario / Wii sports / Bayonetta out by that point as well, amongst other already released titles like Monster Hunter, Pikmin, Wonderful 101 etc.
not forgetting Pokemon (and those toys) which in Japan at least will boost system sales immensely.
Now if, like most launch titles, the graphics on the ps3 / 360 aren't that much of a leap (people will be comparing games like Watch Dogs) Then the average customer won't be able to tell the difference, and Nintendo's software library could become very attractive, especially if the machine is half the price of the competition.
So, I don't think the odds look that bad in a recession. Given that consoles seem to be on the way out anyway, I think Sony and Microsoft are going to find it very hard to shift units, as they're not 'must have' devices any more.