It may be beneficial for Nintendo to set up a hardware team in the West to build the successor to Wii U while the merged Japanese hardware team continues work on the successor to 3DS. Each team would better understand their respective markets. Nintendo's current hardware team knows how to build a successful handheld. A Western home console team (ideally) would be comprised of people with a Western mindset and be in constant contact with Western third parties. The key would be for each team to collaborate on the system software so that the handheld and home console feel connected. Having a unified online account system is something that shouldn't even be a conversation we're having today. Nintendo Network is a step in the right direction, but you know, get on that.
That's a horrible idea. Nintendo's consolidated R&D is needed to get the home console and handheld built with connectivity/unity in mind. I pointed out the problem with Nintendo's hardware process above; build the box for size, restrict it's power and then try to fill it with components.
That limits your options to expensive smaller and/or older style components,
They need to first come up with a capable machine that can do what they need it to, and then figure out how to miniaturize it. It being the size of 3 DVD and only 20 watts isnt' really important to anyone but Nintendo. The Wii could have been 3x the wattage and twice the size and it probably would have sold just as well if not better.
Putting the Handheld and Console together will be good on it's own. Changing the focus of the home console away from compact design and power consumption first and foremost, to one of the last concerns would be a huge step in the right direction.
Nintendo's other problem is hiring competent programmers that know what they are doing, or actually allowing the ones working with them (Google) actually do the programming, because like has said many times, Nintendo doesn't always need to reinvent the wheel, but they do need to use the best ones for their vehicle.