...and once the developers catch up with the specs of the upcoming systems, it will stay far behind with decreasing support, living on first-party life support like the Gamecube has.
Of course it's an opinion - I don't have a crystal ball, I can't see into the future. I can analyze the situation and draw basic conclusions though - it's not selling for a reason.
I think the evidence does not support your conclusions. Most people are not going to go out and spend hundreds of dollars on a new console unless they have a compelling reason. If you look at the games available on the Wii U, they are only just now starting to create a compelling game library.
As for third party support, that has more to do with the relationships Nintendo builds with third parties and whether those third parties think their games will sell well on their consoles.
If you look at the last three generations of consoles, the ones with the best hardware were not the winners. The Wii had less graphical prowess than the PS3 and the Xbox and beat both. The PS2 was markedly less powerful than the gamecube or the xbox, but sold more than double the units of both competitors combined. The PS1 easily outsold the N64, despite the N64's magnificently better number-crunching power.
When I look at the gaming experience, for me personally, the Wii U has a lot more going for it. Most of the best third party games that did not appear on the Wii but only on the other consoles were also obtainable on the much more graphically powerful PC versions. Neither competitor to the Wii had very man highly-rated exclusives, the Xbox especially.
I should add, I think it is possible for a big video game market collapse, but nothing like was seen in the 1980's. In the 1980's, there were huge numbers of competing computer architectures along with a ton of consoles and hybrid computer/video game machines. Atari was the indisputable king, and the crash nearly destroyed it.
These days, there are fewer but more diverse systems. There only two major commercial OS's, only one which is commonly used for gaming. There are only three major home console makers, two major handheld console makers, and three major phone OS's used for gaming. All the companies involved have the economic power to weather a crisis. Could one or more of them be forced from the home console business? Absolutely. Could one or more major gaming studios go under in a crash? Absolutely. Will the game industry be decimated? Absolutely not.
Android and iOS developers along with PC game manufacturer's will keep churning out piles of shovelware. The biggest risk is a collapse in the market for really well-designed, artistic games who get buried.