What I got out of the interview is that Iwata and Co. are 'shifting' their model a little bit. Instead of trying to go pound for pound with MS and Sony, they're going for the Apple route. Apple computers aren't taking a significant chunk from the PC market, but yet they're still around. They may have cool gadgets like the iPod, but does the general public take Apple seriously? I doubt it. Its looking to be the same way with Nintendo accordoing to Iwata's logic.
So starting with Revolution, They'll be making taking that stance into account. Sounds to me they're willingly going off the fringe, and hope the Nintendo army will march with them, keeping them profitable enough to make games. And if you want good 3rd party support, grab MS's or Sony's next machine. At least, that's what I'm getting out of it.
Noble feather, are you an insider? I'm guessing revealing too much will comprise who you are, but at least answer that.