"Industrial accident", ouch. That term is going to crop up in the future.
Wii U's situation is really hammered home when you read that Gamecube retrospective. Especially the quotes about how they said no one would buy a DVD player which could only play the few films from one studio a year. They knew the problem, but thought the solution was just increasing their own output rather than the obvious solution which was letting other studios fill the gap. Which is arguably what helped them most in the N64 days with Rare. With the jump in specs from DS->3DS, and the move to HD with Wii U they just can't increase their output enough and it was foolish to think they could.
There was another article about the Wii's development a while ago where they talked of considering a dual-screen console but rejected it because they wanted to keep console and handheld distinct. So Wii U was already a concept that they saw problems with, but went with it for lack of confidence in anything else. Born out really by how badly they have leveraged the gamepad as a worthwhile addition, they just don't know what to do with it.
With Wii U now you've got the equivalent of a Pixar box. Great games, different to everything else, and polished to the n'th degree but would anyone buy a box just for them? Only the very faithful, or those who want a companion box to round out their games collection. Too expensive to have much appeal as a companion box though, and the 3DS is much more viable companion device if you just want Nintendo games.
I'd hate to be Iwata right now because I really don't see where they go next. They can knuckle down and ride it out as before but they are under assault from all sides. With everything converging they are isolating themselves as a much-loved relic of how things used to be. As time goes on even that love will subside though.