-That's true but Nintendo has been fucking up lately in general. They messed up the 3DS launch/post-launch, and their entire Q4/Q1 was/is kinda shit. Poor Wii U launch and no stand out holiday 3DS games in NA/EU. They have the possibility to lose relevancy to the casual market and the hardcore gaming markets depending on what they do in the next few years.
Then lets compare Nintendo to Nintendo. The original DS was laughed at during its first year on the market. Most games released for it during that time were experimental to the point where they had as much content as some 99 cent apps on the app store - even Nintendo titles. And it certainly didn't help that the OG handheld was ugly to boot.
New Super Mario Bros. didn't release until 18 months after the system launched, and Mario Kart took 12 months to see a DS iteration. Luckily Nintendogs which released 6 months after launch was a huge success, and so were the Brain Training "games" in Japan, though they took an extra year(!) to make it to the west.
How about the defining franchise for handheld gaming? Pokemon saw its first DS iteration two whole years after the system launched! And that was only in Japan - the rest of the world waited until spring of 2007 - that's 30 months without a DS Pokemon game. Insane by today's standards!
But the market was indeed dramatically less competitive a mere 5 and a 1/2 years ago. The launch of the iphone and the app store did a lot to change that in a very short time.
Barely any company on the planet has been able to keep up with the changes that happened during the last five years, with the most (only?) successful being Google, and that probably has a lot to do with them already having been at work on similar long term plans as apple's at the time.
So yeah, handheld gaming on dedicated devices is declining worldwide right now, and there's probably not a single company or product in existence that could do a lot to combat that trend. The fact is they are releasing more games at a higher frequency than they did on DS, but it's likely they won't see the same level of unprecedented success they saw that one time. Without going into further detail and dragging this on, it's fair to say the same about Wii U vs. Wii, despite the fact that Nintendo have learned from some of their bigger blunders last gen (specifically regarding online content and being accessible to smaller studios) while simultaneously making some new ones (like not having enough titles ready for the system's first year on the market).
I'm not saying there aren't elements under Nintendo's control. For example one of the reasons Wii was so huge right out of the gate were Miis, and Nintendo didn't have anything of that potential magnitude ready for Wii U's launch. They also didn't have anything with the potential to succeed Nintendogs as the must-have casual IP for 3DS.
The whole NSMB 2 and NSMB U thing, releasing close to each other and both looking unremarkable on the surface is also a mistake that should have been avoided.
In my opinion Nintendo's biggest burden right now is its resistance to change, and this is a trait we've seen a few times before in Japanese multinational corporations, so maybe there is a cultural influence here.
But while being conservative definitely has its shortcomings, it also has benefits. The ever escalating pursuit of more power and more graphics that western companies seem to love so much is at least as unhealthy for the industry as Nintendo's fear of online for example.
You could also argue the same about the massive pressure iOS and Android have put on pricing in the industry. If somebody told you in 2007 that the makers of Far Cry and Crysis were going to become an exclusively free to play studio you'd think the entire market was headed for another crash! And truthfully, maybe it is! Things are changing so fast right now nobody can honestly tell!
Even if you don't agree about the benefits of 'playing it safe' when conditions are unpredictable, lets not pretend there's an army of people in the waiting who could do a better job at running Nintendo than Iwata has during the last eleven years, when every single player has made very expensive mistakes - either damaging to their bottom line or to the future of gaming as a medium.
Pachter is right that it probably won't happen until they absolutely must do it to save their asses. The wave of negativity crashing against Nintendo is just crazy non-stop these days. As a former Nintendo fanboy from back in the day it's kinda sad to see, but the Wii U was just a stupid idea. 
