I do have to laugh at the people swearing blind that Nintendo can't possibly compete directly and come out on top. It really seems to be a case of Nintendo having repeated the lie often enough that it's become fact for a lot of people.
Instead, look back over their past for a moment:
Gen 3: NES comes into the market and blows the fucking doors off with a low cost, high powered, and easy to use system with a boatload of exclusives. Markets the system perfectly as an entertainment device/boys toy so as to sell in the US and in doing so regenerates that entire market. Easily the winner if the generation.
Gen 4: Sega tries to take the crown with the Megadrive, markets itself as the more edgy alternative system, and more third party friendly policies. Chips away some of the market share, but ultimately fails. The SNES is the undisputed winner of the generation, having at least the joint best hardware, more exclusives and better, more popular titles.
Gen 5: This is where they begin to stop competing. Playstation enters the race with a far better third party support system and policies, CD drives, and markets itself to a wider, more mature audience. Nintendo refuses to compete, sticks with outdated carts, aiming at children, and with the old draconian third party policies. Has greatest success in the US, where NOA had free reign to make deals and produce games aimed at a more mature audience. Overall second place, but still a damned sight better than Sega and the rest of their competitors, with the likes of Atari et al leaving the industry entirely.
Gen 6: Still mostly refuses to compete, crippling themselves with low storage capacity proprietary discs, a non standardised controller layout, and no multimedia capabilities. Worse, they gut NOA, killing off even the possibility of fostering a stable of games that would continue to appeal to the western game enthusiast. All but hands the American market to new comer Microsoft, that swoop in to grab the public mind share of being the 'Shooter console'. Inspite of all this, and the bottomless pockets of MS, only barely sell less than the Xbox 1, have a system with almost as much power, far more than the PS2 infact, sell for a far smaller price, and unlike MS's lost billions, turn a healthy profit in doing so.
Gen 7: Refuses to compete at all, but lucks out with the lightning in a bottle that is the Wii. It prints money. However in doing so they completely kill their relationships with third party Devs/publishers and worse, game enthusiasts. When the Wii bubble bursts, they do nothing to try and keep their new audience engaged, and completely ignore the emergent threat of the mobile industry. Pyrrhic victory at best.
Gen 8: Refuses to compete with either Sony and MS or iOS and Android. Out of date tech, low powered, terrible marketing, no attempt to appeal to anything other than their hardcore fanbase or the lost casual market. The latter of which has gone to mobile and is never coming back. Sales track at sub Dreamcast levels.
The same this is shown with the handheld market. The Gameboy out competed everyone that challenged it. The DS trounced the PSP. The 3DS refused to compete with mobile, and is getting annihilated, but is curb stomping the PS Vita that it is actually competing with.
So year, fuck the 'but they just can't compete!!!' bollocks that even Nintendo spout. If they stopped navel gazing, and tried providing what the market wants, rather than refusing to incorporate anyone else's innovations or desires into their products, actually tried to change their public perception and target audience, and fucking well tried competing like they used to, they'd at least have a chance at doing better than they are now, because history shows us that the most successful Nintendo is down to either market savvy competitiveness, or blind luck, and you can't run a business based on luck.