It is pretty clear to me that there is one way that Nintendo (or someone) can innovate and really capture their market again, and it revolves 360degrees around one thing, and one thing only: development tools.

Imagine if they released a console that had development tools bundled - i.e. onboard. Wouldn't that be a wonder! Especially if it were designed in such a way that it were Nintendo-easy to publish to a world-readable games store ..

Seriously, I believe this is one area that can blow open the whole game industry. Ship Unity developer edition on the next console, Nintendo, and make it available to everyone. You'll get a new game market created in no time...