The Wii was never $350, and the Wii U is currently on track to do worse than the Gamecube (PS3 was never this bad). It's a historically bad launch and at this point the window closed for a recovery as soon as the PS4 was announced. The hardcore Nintendo faithful have for the most part already bought them at this price, and now even if they reduced the price and released a couple of truly good games you are asking for a $350-$500 (controllers, games, accessories, etc) investment in the glare of the next generation of consoles.
It would be nice to have 3 viable competing consoles, unfortunately Nintendo put out the 3rd of a generation that is already several years old and declined to compete with the next one.
I don't see a scenario at this point where they repeat their mild success rejuvenating the 3DS via price cut (it still missed expectations this past FY), especially with them already selling the U at a loss. They're sitting on a lot of cash so it's not like Nintendo is going anywhere, but I too think this could be their last home console.
Vita is going down the same path, with Sony just reading water with the device until the PS4 hits to see if they can get it to catch on as a PS4 accessory it seems.