Personally, I disagree, because I think that innovation is going to be increasingly driven by software, and not hardware. Right now gaming consoles are still a big deal, but I don't think they will be forever. As the use of computing extends more to tablets, VR glasses (Oculus Rift, Google Glass, etc.), interactive tables, cellphones, all sorts of motion control interfaces and more, what the world will need is not companies to make these devices, but to create the games that best use these devices. Nintendo can still be Nintendo, but instead of creating hardware to drive the industry, they'll be creating software that will challenge and drive the industry.
It may not be next generation that this happens, but I think it will at some point. Especially as the lines between devices start to blur, and people come to expect that all their myriad screens and interfaces will work together more-or-less seamlessly. Unless Nintendo wants to get into the PC, tablet, cellphone, smart-house, appliance, peripheral, etc., etc. markets, at some point they'll have to start making software that plays nice with systems other than their own. I'd rather them do that sooner, and be a leader in that respect, rather than be forced out by not adapting to a world that will move past systems that keep tightly to their own ecosystem.