I'm going to start off by laying my cards on the table so as to state where I'm coming from. I'm a Wii U owner from launch, one of the lucky £199 Premium ones. I also own 360s, Wiis, a PS3 and a 3DS amongst other consoles. I wouldn't say I'm a big fan of any one particular company, I grew up on Sega consoles but migrated to PC for a few years before getting back into console gaming with an N64, a Gamecube and a PS2 within a few months of each other.
I usually don't buy a console at launch - I only did with the Wii U because of the Amazon misprice, so if that wasn't the case I'd be looking from the outside in like the vast majority of people.
What I don't understand is the inability to separate the objective reality from personal interest. There's nothing wrong with saying 'I don't like this' because hey, it's a hobby and you're supposed to enjoy it. Yes, the Wii U is selling badly, yes the release schedule is bare and yes, third party support isn't what people were lead to believe before launch.
However, third party support at launch isn't a particularly great barometer. I didn't like the Xbox 360 for a long time, I think the first games that really caught my eye were Gears of War and Mass Effect. This puts it around 2007, a couple of years after the US launch. I even got the PS3 before my first 360, even though it was mocked for either not having games or having substandard ports. The PS3 started off this gen absolutely terribly, I remember the boxes piled high at launch. The games seemed lacklustre and there were vague promises of support - everyone was in for Metal Gear Solid 4, Gran Turismo 5 and the next Final Fantasy but in terms of what you could pick up right away, pickings were pretty slim. Correct me if I'm wrong but the first excellent exclusive would've been Uncharted around 07/08?
Anyway, launches by and large are terrible value for money. You pay over the odds for a system that has no guarantee of software quality and even worse for trends. The PS1 generation's casual demand was boosted by dance mat games - shops closed down and they still had stock of the buggers. There wasn't anywhere near the same demand once the PS2 hit, not even close. You could still get them but no one asked 'hey, where's Dance Dance Revolution 2003?' in those numbers. No, that was Guitar Hero. Hand on heart, who could say they saw that coming?
There will always be something that ends up capturing the imagination of the greater public and I hate to break it to you guys but that's not us. Talk of Nintendo failing to capture lightning in a bottle a second time is neither here nor there because to us, it's all the same. We came for the Wii Sports and stayed for the Mario Galaxy. Actually we were there anyway, no matter how many people loudly bitched about motion controls and wishing to go back to traditional game input. If anyone could honestly say what the next generation's big hit will be, they ought to go invest right now because there won't be a better time. And I'm not being forceful or incendiary here, because I don't know. On paper, I couldn't tell you why the PS2 did so much better than the Gamecube, Xbox and Dreamcast because technically they were all very capable. Obviously there were differences in marketing, politics and support but objectively you could buy any one of those consoles and have 'enough' games to make your purchase worthwhile. None of them come close to matching the PS2's library and I genuinely think that it was more of a force than the Wii - because the number of people who bought the PS2 can be neatly divided between the 360 and PS3.
It's difficult to evaluate the Wii U because we don't know what the next offerings from MS and Sony will be like in reality and the current competition are incredibly mature. Sony's PSN is miles better than the pitiful offering at launch and the 360's power in numbers on Live is more a self fulfilling prophecy these days - people stick with Live because their friends are on Live so they stick with Live. I'm sure there are examples of people who have made the switch to PS3 but nothing like the shift en masse from PS2 to 360 at the start of this gen.
There are obviously genuine issues with Nintendo - their abortive shift to HD quality, their struggles to maintain their core philosophy while competing in an ever growing market (because you can't argue that tablet and phone gaming isn't competing in the same breath that the casuals have left because of it - if that's where they've gone then it's a competitor and Nintendo need to embrace that).
Those who call for them to go third party are looking at it through the prism of their own hobbies. They don't want to buy a Nintendo console to play Nintendo games, they want it on their own machine. A homogenous console market would be a terrible idea for all sorts of reasons but understandably people want to be able to play all the games, like they can watch all the films and listen to all the music. However, just look at Sega for an idea of how going third party isn't necessarily a good fit. Plus Nintendo will always have the handheld market to fall back on and if not next gen the one after, they could release a hybrid machine and quell any sort of argument.
It's neither here nor there saying the Wii U is too expensive at £300 (for what it's worth, I think it is) because ultimately it's what the market is prepared to pay. People don't talk too much about the economy but I think it's telling that the number of PS360 consoles sold in the UK has increased but the sales of software has decreased. Surely with a bigger user base you'd at least expect a modest increase but despite that, people are spending less - and presumably choosing to get the most out of the games they already have.
It's concerning that they're not doing well but at the time the Gamecube was up against one behemoth that swept before it - yet the Gamecube is considered a failure whereas the Xbox is looked on much more favourably. Sometimes it feels like Nintendo are held to a different standard, which is fine from a gaming point of view but looking at it as a business then some of the calls are just as weird as the stuff Nintendo plan.
Unfortunately, gamers are fickle. We'll forget a year's barren schedule if the games come thick and fast after - and we'll forget plenty of titles when the games start to dry up. Look at the shift in perspective from the 360 to the PS3.
As for the casuals, well, so far there's nothing for them - on any machine. Why should they leave tablet and phone gaming? It's cheaper, it goes with their phones everywhere and they drop pennies on it.
tl;dr - Wii U is doing badly but it's hardly a death knell when there are so many unknown variables. Nintendo could do a lot more but there's no need for CPR yet.
I'd guess at an E3 price drop to counter any announcements by Sony and MS, plus it would be post summer update so hopefully the OS won't be as ridiculous.