The problem is Nintendo is way too conservative and I'm not sure they have the economic power to compete with microsoft and sony. Game development has exploded in development costs and only megalith corporations like Sony and Microsoft have the bribing power for those excellent game companies that make your platform a "must own" games like Metal gear solid 3 by Konami will never see the light of day on a Nintendo console and this is a huge problem.
Huge mistakes they made this round:
1) Once again Inferior storage technology (1.5Gb gc discs, vs DVD5 (4.3GB) and DVD9 (8.5GB) More and more games are starting to use DVD9's Squaresoft's Xenosaga, Metal Gear solid 3 to name only two. You dont want to be BEHIND the technology curve when next generation RPG's and games like Metal gear solid can only be done on Blu-ray discs and Nintendo is using some ridiculously small storage medium limiting the kind of gaming experiences that can be created: Best to have equal storage to competitors then be behind them.
2) They didn't do enough to get games to be devleoped for the gamecube long before the gamecubes release (pre-emptive game development so that you have games when the console is released).
3) Identify all killer apps and games with most sales for their target markets and get them exclusive at the release of your console. Imagine Final fantasy 13 and Metal Gear Solid 4, exclusive for Nintendo revolution!
4) They didn't spend enough money bribing or wooing 3rd parties, lets face it Microsoft is out to kill. Buying RARE was just the start, they are declaring war against all comepetitors with that huge warchest of cash.
5) (Personal gripe) Bad controller design, a controller has to control all games well across all platforms. Fighting games and certain other games are the worst on the gamecube. Keep it simple stupid (PS1 and PS2 controller is godly and Nintendo could have made a better one if not for the crappy button placement).
6) (Personal gripe) They have to stop designing things like controllers around THEIR games only (gamecubes poor button sizes and placement for fighting games).
7) I was forced to buy a bigger memory card because I saved lots when new games came out. And being forced to buy a bigger memory card ticked me off, especially when they were way smaller and cost more then the comeptitions memory cards.
Bad online support and NO GOOD LAN or Internet play (ugh!), how I would have loved to play F-Zero GX over the net.
9) Gameboy-to-Gamecube "connectivity" with NO OPTION of using your regular gamecube controllers to play multiplayer, i.e. Zelda 4 swords, Final Fantasy Crystal Chronicles. This was the worst idea ever, after saying Nintendo doesn't want people to "pay" they did the most stupid thing with the gameboy connectivity. No one wants to spend an extra $100 for a gameboy advance as a glorified expensive controller.
Now ultimately... the problem ultimately is that their "Nintendo" brand and games are not worth what they once were and this is reflected in the amount of people who own a gamecube. Most people that own a gamecube own multiple platforms now. I'd say they are the hardest of the hardcore gamers for the most part. Owning Both Gamecube, PS2 and Xbox in North america, while japanese gamers are Owning PS2 and Gamecube in Japan. I'd say at least 80% of the people that own a gamecube own either a PS2 and/or Xbox in North America and that is a huge problem because when a game comes out we'd rather have the best version for the best system if its multiplatform.