The Wii was a device for the casual audience and this audience now has smartphones - that's all there is to it. Had Nintendo released a proper Next Gen, capable of competing with the PS4 and the XBox One and didn't market it to an audience which doesn't exist no more, the system would have more games by now and it would be just as desirable as the forementioned two. That being said, sticking to the Wii legacy probably wasn't the best of ideas since the Wii was the last thing you'd associate with "Next Gen".
I don't think Nintendo can succeed with that strategy at this point. The Wii U is not struggling because it is not as powerful as the other 2 newer consoles. As far as marketing, well you can make a case that the Wii U doesn't have any, but I think overall the audience going out there and adopting those new consoles would not be buying the Wii U at this point even if it was the most powerful console. See Gamecube....the most powerful (or as powerful as the original Xbox depending on who you talk to or what you mean), the cheapest, and having all those multi-platform games for the most part.....distant third in the "console wars" (yet still profitable). It's an image thing and I don't think Nintendo is even capable of changing its image in a way that would allow them to compete.
This image doesn't matter as far as hand held gaming, its a different market.
3 of 6 Nintendo Home consoles have been market leaders and they have done just fine when the others were not and they are plenty capable of riding this one out just fine too.
...And not because of being a "casual device". Nintendo handhelds have always done well and will continue to do so. Even them I'm not sure the 3DS will reach DS levels of success. It'll still do great but not as great.
I agree. Handheld gaming overall is dominated by a younger audience, that does not mean the same thing as the "casual audience". Parents will buy their kids handheld consoles because they make their lives easier.
This is also a big reason why Sony's home console strategy does not yield the same success in the handheld side.
The hardcore/mature/ whateever you want to call it home console audience overall is not as interested in handheld consoles.