They've been trying to break into the teen/young adult demographic, but its been in vain. Sony has staked their claim there, and MS is trying to compete in the same demographic.
Now would be a great time for Nintendo to jump over both systems, and its a simple move.
Nintendo buys Sega. That would immediately give them better sports games than the rest of the consoles, and a HUGE library of quality games. Not to mention that the Gamecube is already cheaper than the other two consoles. I'd love to see Nintendo back on top in the console wars.