Not true - as I said in another thread, Nintendo is like Apple.Making quality games has nothing to do with also making hardware. Sega's game issues had nothing to do with leaving the hardware business.
Nintendo can continue to lose their ass in the hardware market if they choose but there is tons more money to be made making cross platform games.
They build the hardware to fit the games they want to make, not the other way around. This includes motion controls, dual screens, etc - new ways to interact with new games they wanted to make. They also adhere to having a console that is profitable by itself or as close as they can get - they don't have a multi-division company like Sony or MS backing their failures, their consoles have to make money. This limits them from competing toe to toe, graphical power wise, with the other two.
This does wonders for their own 1st party games. Nintendo's 1st party games are almost all high quality, well received, and consistently get great review scores.
On the other hand, it hurts their ability to attract 3rd party and multiplatform games. Unless Nintendo moneyhats a publisher/game studio (or saves them from bankruptcy/buys them out) , they aren't going to take the extra effort to develop a 4th version of their multiplat title. This is even more true now that the PS4 and XB1 use the x86 architecture that PC's have been using while the Wii U is still using PowerPC. It's not a huge hurdle but still a hurdle.
If they stopped making their own hardware, not only would it be less profitable (the slight gain from being on 2 platforms vs 1 wouldn't outweigh the loss of 100% profits from their consoles, not to mention licensing), but their games would not be as different and fun. Their games would have to conform to hardware they had no say in creating, which would affect the kind of games they made. The best thing about Nintendo is that they are so different than Sony and MS - completely different experiences.