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Was Nintendo stopping the hardware power race solely due to the disappointment of the GameCube warranted?

Gamingtodaynews1b - Was Nintendo stopping the hardware power race solely due to the disappointment of the GameCube warranted?
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I seem to keep seeing people say that Nintendo stopped competing with Sony and Microsoft in terms of hardware power because of the disappointment of the GameCube, and as a result pursued the 'Blue Ocean' strategy. But was that the only reason?

If yes, I would argue that such an argument was probably flawed:

  • Aside from not being PlayStation 2, it also had a kiddy design and used an inferior storage medium that had less capacity. Even though it was actually more powerful than Sony's console. The EXACT SAME PROBLEMS as the N64.
  • To put this in cake analogy, you have the best sugar and eggs that nobody else has access to (excellent 1st party games), an extremely advanced oven (powerful hardware), but you keep using rice flour, then corn flour that taste terrible with everyone else's sugar and eggs and only go well with your own (inferior storage medium of cartridges, then mini DVDs) and decorate them to look like brightly coloured birthday cakes (kiddy design). Then when your cakes don't sell well, instead of switching to wheat flour and more neutral decorations, you conclude that selling cakes is unprofitable and stop making cakes altogether, making cupcakes instead. And only now you start using wheat flour…

So was there another reason behind stopping the race for hardware power? These are my guesses:

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  • Nintendo saw how Sega's Dreamcast failed even though it was comparable to the PlayStation 2 in terms of power: Problem with this argument is that Dreamcast's failure was probably due more to Sega being outright hated by customers and developers because of the Saturn fiasco, its only truly popular 1st party franchise was Sonic, and it could not play DVDs. Also Sega was too weak financially to continue fighting.
  • Nintendo saw how Sega's incredible Dreamcast could not shake off the Saturn fiasco, so Nintendo thought they would never be able to shake off their kiddy reputation: Well firstly Sega's problems made them HATED, while Nintendo's problems merely made them ignored. Secondly Nintendo did not try hard enough to shake off their reputation as stated above (kiddy design of GameCube, and promoting the purple model rather than the black one).
  • Nintendo saw how Microsoft's Xbox could not surpass PlayStation 2 even though it was more powerful and could play DVDs: Problem with this argument is that Xbox's disappointment was probably due more to being a newcomer trying to force its way into a niche already occupied by PlayStation 2, as well as having not many popular 1st party franchises other than Halo and Forza Motorsport.
  • Nintendo tried to draft their next powerful console, but realised that it would be impossible to make and sell it at a reasonable price point at a profit at that point: Not sure about this, but the fact that PlayStation 4 and Xbox One sell at a loss even though they use PC architectures makes this possible.
  • The disappointment of the GameCube gave Nintendo the opportunity to take a few steps back and realise that by pursuing hardware power, they were deviating too far from their core philosophy of 'lateral thinking with withered technology' and the toy maker mentality. (I can't really comment on this)

While Nintendo's 'weak hardware, interesting gimmick' strategy went wonderfully with Wii and Switch, it went even worse than GameCube with Wii U. In other words, high risk, high reward. And if Nintendo's attempts at this strategy all went the way of Wii U, they would end up in a worse position than if they had simply produced GameCube successors with the storage medium and console design problems fixed. And while it may be tempting to say that Nintendo is smart enough to ensure that their gimmicks will not fail that way… well look at Wii U and Virtual Boy; they are not infallible.

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