I do wonder if the quality of Nintendo games and their ecosystem would actually drop if they switched platforms.
Yes, the fail of the Dreamcast was devastating to SEGA. But the same might not be true of Nintendo going third party. Also, just as harmful to SEGA was the Sammy merger, I have heard. I don't really blame their decline in quality on the Dreamcast. And in fact, they had several horrible Sega Saturn titles. It has been a struggle for them ever since 3D. Sonic 06 was just a horrible internal decision. And Sonic Generations and Sonic Colours are probably better than multiple Dreamcast offerings.
It is true that their general output is weaker, though. You could see their motivation with the Dreamcast having a single system to make games for like that. And they certainly put out a better variety of games like Shenmue, Virtua Fighter, Super Monkey Ball, Skies of Arcadia, Chu Chu Rocket, and ect. Whereas now you don't see much other than the occassional fledgling Sonic game.
They're still making nice games. But I miss the energy and experimentation of SEGA when they were making games like Chu Chu Rocket. You never see anything as different or experimental as Chu Chu Rocket out of SEGA nowadays. I don't know what to blame for that, but I feel like the Dreamcast can only be partially to blame, at most.
Anyway, I think that few people enjoy Nintendo hardware anymore. Except the 3DS. Nintendo handheld hardware has always been interesting. Nintendo stopped being interesting in terms of console hardware since the Nintendo 64. The Super Nintendo was a legitimate piece of hardware. But the shift from the 16-Bit generation onward was treacherous. It was the the most volatile time in the market since the original crash. There were loads of people trying to make the next step to 3D. To the next generation. And most people failed. You had all sorts of slow transition phases like the SEGA-CD, and most kids weren't willing to spend the money on a new generation.
I was one of those kids who didn't have the money or motivation for a new system. Everything was so expensive, and SEGA and Sony were the best competitors early on. We all know that Sony eventually came out on top as a product consumers could actually trust. But it was a struggle and there was loads of junk on the market making kids not want any new system. There was the Jaguar, the CD-i, the 3DO, it was a dangerous time. Sony had to struggle against a lot of market mistrust of new hardware.
The other part of this is that Nintendo didn't do a good job of jumping in and that generation was one of mismanagement for Nintendo. Nintendo, being too scared with how the market was for new hardware, or so as I understand, basically gave the Sony PlayStation to Sony. A lot of the original PlayStation hardware was all Nintendo, but instead gave the patent to Sony. Sony ran with that Nintendo hardware and took the generation. The PlayStation could have been a Nintendo product if Nintendo were smart. Nintendo then had to follow up to that mistake with a new system, the Nintendo 64 came late in the generation and could not get enough third party support. From then on the console market had been handed to Sony.
Everyone has been fighting with Sony ever since Nintendo handed the hardware crown over to Sony via the PlayStation. And quite literally with Nintendo's former PlayStation patent rights.
And the fact of the matter is, since then, we've all been buying Nintendo hardware just to play Nintendo games. That's not really a good position for Nintendo or customers. We have to buy a piece of hardware we don't need, to keep playing Nintendo games. It's not like we want the hardware, we want the games.
It would be nice if we didn't have to have the hardware. Again, ask most people what they really enjoy Nintendo for, and they'll say the software. Their software sells their hardware. But couldn't they possibly do better not forcing us to buy hardware just to enjoy their software offerings?