Nintendo aren't going anywhere. They know their target audience and have become very proficient at leveraging them = casual players, the type of people who just want to turn it on now and again and have fun. Hardcore gamers will stick with the PS3 and XBox - which is fine.
Where they are failing is in the complete lack of online content, sure we have Netflix but what about Hulu, Amazon, Pandora, etc. etc? Nintendo's own online content is limited to a couple of poorly made News and Weather channels and some stupid Votes channel that nobody cares about (Japan does have a movie rental option I believe). It could be so much better with little effort.