Eh, half-right. The 3DS is a powerhouse, they understand the handheld market and that's a market they should DEFINITELY focus more on. They've proven 4 generations in a row now, that they just don't get what the gamer want in a home console.
N64 stuck with cartridges, which I personally agreed with (I could never stand Playstation loading times), but the masses disagreed with.
GC had that weird-ass controller with the A button taking up half the controller, tiny buttons around it, and a shoulder button which you had to push down about 2 feet for it to register (which for some reason, Nintendo fans still love to this day). To say it lost to the PS2 and XBOX is an understatement.
Wii grabbed the casuals to buy the system....and then those people never bought another game (the attach rate of games to systems were historically low). They made a ton of money, which certainly helps their current situation, but outside of the diehards, that console sell rate didn't do a ton for them.
And now, the Wii U, which is underpowered as a gaming system and non-existent as anything else, which even given a year head start, is being lapped by the other consoles.
If they were to ditch the home console market, focus on handheld and put home-console-style games on other platforms, I think the majority of people would be doing backflips and lining up in droves to buy the games we've been missing for years now, by not having their platform.