I can't really disagree with your points there, because they are not irrelevant yet, certainly not to consumers. If you are a producer of third party software, they are rapidly becoming irrelevant despite the huge install base. Perhaps they can continue to succeed once they've lost all third party support (other than the shovelware), but that's not a bet I would make as an investor. If it weren't for their success in the handheld market, they probably would have folded in the early 00s, and now they have very fierce competition in the handheld market.

I put the beginning of the march at the end of the NES era, when third party developers that were disgusted with Nintendo's greedy, hamfisted approach to licensing fled in droves to Genesis/Megadrive and PC-Engine. Sales held up reasonably well with the competition through the SNES era, but plummeted dramatically once Sony got in the game (due to Nintendo's greedy, hamfisted approach to partnerships). Handheld sales kept them alive during the dismal N64 and GameCube years, and they did quite well with the Wii (although software sales have plummeted). Once again though, Nintendo's greedy, ham fisted approach to working with developers is probably going to hurt them.

If you look at the big picture, you will find that Nintendo has been in decline for a long time, and that their questionable business practices will hurt them in the long run. Let's all come back in ten more years and see if I'm right.