Nintendo is in disarray because they waited too long to launch the Wii U. I know that this sounds like (and is) sour grapes because they didn't launch the Wii HD in 2009 or 2010 as I "predicted". They should have, and because they didn't, the decline in Wii and DS hardware and software sales drove them into generating LOSSES. For those of you who aren't financial analysts, losses mean that the company is worth less than it was before. Nintendo stock has dropped by over 80% in the last few years, and the market has appreciated over the same period. I'm paid to advise investors, and none have made a profit owning Nintendo stock. I don't think that many will make a profit over the next few years, because I don't think Nintendo's strategy will return them to profitability.
This paragraph is far more sensible in my opinion. But it's still an open question where WiiU's tech will land. I expect it to be in the realm of 360/PS3, and the 2012 launch does seem too late to have a big impact.
I find much of the financially-minded analysis of videogames to be too fatalistic. There's always a presumption that current trends will continue indefinitely, and it rarely seems to hold up. There's always the potential for some unexpected game to come out and shake everything up, regardless of the platform.