I have not given up on Nintendo, but the day they come out with something that is brand new and worthwhile that is not one of their many beloved characters will be the day they will be included in the conversation again. Nintendo had created their own lane with the Wii and essentially buried themselves at the same time. The Wii had was one of the most selling consoles of all time and that seems to be its biggest accolade.
To answer the question in a better fashion Nintendo can not and will not compete with Xbox or PlayStation because they are still in their own world and should they even leave? Yes and no. They should because Nintendo has reached a point where they are really just trying stuff and hoping that it works. They are at the point where Apple is right now. Where they have added a touch bar to replace your top row on your keyboard and have the audacity to call it innovative.Nintendo is stuck in a terrible position. They can either continue with the mix of trying to be innovative hardware at the sake of losing the hardcore gamer, or they could go for the hardcore crowd. They could go for a powerful console and then afterward focus on making new IPs and better games.
At this point though it seems there is no coming back and they should continue doing what they are doing.The Switch is a very interesting product in a way that it is trying to appeal to the hardcore and casual consumer. Only time will tell if it will work. The Nintendo Switch will not be the thing that changes that. As matter of fact, that only solidifies them in their own position. This is actually a good thing for them as they are somewhat free of consumer influence. Nintendo has done their own thing since they started and will probably continue to do it no matter how different the products are.
People will still buy it and because of this Nintendo does not have to stay in the loop. They do not have to fully compete in the so-called console wars and worry about coming out on top. They found the audience and will continue to provide for them the best they can. As for them going into the mobile gaming market is a whole different story for another time.