Nintendo could make money just fine as a 3rd party developer.
If all nintendo's system is going to be is an outlet for their games and nothing else, it's just a waste of money for the consumers and for nintendo, and they'll just go the way of SNK.(except they make more than just fighting games)
Speaking of SNK, there is a gameboy game called CT: Special Forces 2 that looks a lot like metal slug....is it?
Also, another major blow to Nintendo was that the lead guy at HAL left a while ago. Now, after nintendo lost Gunpei Yokoi, both gameboy and metroid turned out better, but it took metroid about 10 years to come back, and gameboy about 5, nintendo doesn't have that kind of time now. IMO, the only game on gamecube that lives up to the best of the best of the best of the best is super smash bros melee, and if there was a game just as good on nintendo's next system and one other really good game, that'd be enough to own it, but another even slower parade of just really good games wouldn't be enough. I was able to consider my purchase of n64 justified by super mario 64 back when I got it, and I still do today, and the same holds true for gamecube and super smash bros melee. Wish there was something like that to justify my purchases of new video cards and pc hardware, as probably the only PC game I could put in that category would be fallout and maybe halflife(and, begrudgingly, starcraft, but I got so pissed with what's happened to b.net, the loss of civilty and the mass proliferation of mass money maps like zero clutter...ok ok, and quakeworld and subspace.....nah subspace wasn't that good, and quake was no fun single player), both of which will run on sub 200 mhz computers just fine.
Nintendo also kept a fairly steady stream of games on n64 with a few really high points(I felt n64 went out great with conker's bad fur day, it was like the perfect contrast and compliment to mario 64), and nintendo's done an ok job with gamecube, but unless geist or metroid prime 2(though I'm actually hoping pikmin 2 will come through, the first one had so much potential) are really great, then gamecube looks like it's about dead already.