Unfortunately, keeping up with Microsoft and Sony, even if Nintendo could manage it, is just a good way to lose money. The 360 and PS3 may be successful, but they have both cost their companies billions of dollars. Nintendo is desperately trying to cling to their casual audience while Microsoft and Sony are hemorrhaging money out of every orifice.
ummmm. No. Microsoft is doing great. Nintendo and Sony are hemorrhaging money... That's mostly due to unfavorable exchange rates between the dollar and yen since their based in Japan but mostly due to slow sales with regards to Nintendo and again, poor performance on the HDTV side of Sony. The new Sony CEO cited Playstation as one of Sony's key brands and it will be pivotal for the company's comeback.
It is true that Nintendo does not sell hardware at a loss. Microsoft and Sony do because they build their consoles for 7-10 year cycles. This means that Nintendo is constantly a generation behind them. They did great with the Wii, but most people have them stored in a closet right now while Xbox and PS3's are selling games left and right. When the PS4 and Xbox 720 (Durango) comes to market next year, I expect the Wii U to have a tough time at it. I'm still hoping for Nintendo to surprise me.