I think Nintendo and Microsoft should have worked out a deal or one buys into the other. Obviously Nintendo couldn't buy Microsoft as a whole but buy the Xbox division. Nintendo has strong first party studios and weak third party support. Microsoft has weak first party studios and strong third party support. Obviously this doesn't happen but if it did they'd both fix each other's weaknesses. Nintendo tosses Retro back into mature game development. They retool Rare into more of the company they were under them and with The Coalition, Turn 10, and 343 Nintendo has at least 5 studios to work on content that targets core gamers. The traditional Nintendo studios can continue to make what they usually do.
The problem then becomes what to do with the Switch? Re-market it as a portable with TV play and move franchises to the Scorpio? Suddenly that combo Nintendo company has the most powerful hardware in the Scorpio. It would have been ideal to have this happen when it was obvious the Wii U was going to fail but before the Switch was decided on in full. At this point it probably creates just as many problems as it fixes.
The problem then becomes what to do with the Switch? Re-market it as a portable with TV play and move franchises to the Scorpio? Suddenly that combo Nintendo company has the most powerful hardware in the Scorpio. It would have been ideal to have this happen when it was obvious the Wii U was going to fail but before the Switch was decided on in full. At this point it probably creates just as many problems as it fixes.