I wish they prepared for HD sooner, but this is impossible without going full HD. Look at the following dividend distribution chart at this link:
http://dividata.com/.../NTDOY/dividend
They were paying out very high dividends in their profitable years. The general rule with deciding what to retain and what to pay is the following:
Management is obligated to pay out to investors the amount that will not make the projected market return over the next period if the firm's investments will not make at least that return. In other words, Nintendo would have a hard time justifying making large investments in 2007-9 on HD development.
If Nintendo met the 360 half way with 1 core, an x1300, and 256mb of ram, plus the motion controls, they could justify retaining the extra money for investments, as they would reap short term rewards for share holders in relation to the share's value.
I know what your thinking, "But look at all the money they made then". Yes, this is true. However, this can be reversed if the current trend continues. However, I am sure their investments in American equities have skyrocketed, so, overall, it would be a toss up.
I hate to say it, but Pachter was right about the need for the HD Wii in 2010, but for the wrong reasons. If they had parity with the 360 in 2011-12, they could have had third party support while they enhanced their internal abilities.
I am intentionally discounting the 3ds, as the $250 price was an inherent disaster, and it was a lead in as to why we are seeing the problems of today. All massive companies do this at one point or another with regard to holding on to past success for dear life. Ever read about how IBM killed themselves in the PC business to save their mainframe business? Or how about how Microsoft and Sony are moving forward with different versions of the same thing, while publishers are condensing regurgitation's out annually?