I wouldn't consider Nintendo a failure, rather they do things their own way. While Sony and MSFT both compete on the latest and greatest hardware to run AAA games, Nintendo is instead providing an entirely different gaming experience. Typical games reach success by making graphics better, framerates higher, and pushing the boundaries of what the system can do, Nintendo seems to have taken the approach instead of making modest hardware with software that is very tailored to that hardware.

The best example of this is Zelda: Breath of the Wild. Technically the game is not that impressive compared so some of it's RPG peers, but that's not the point. While no detail is by itself that impressive, the whole package is fantastic.