Nintendo doesn't need to westernize to that extent. They do need to be aggressive enough with their next console to actually get third party support. This doesn't mean they need to beat the online infrastructure of Microsoft and Xbox Live, but they do need to invest in a network they can future proof and have key features like voice chat etc. I'd honestly be ok with paying $30-$50 a year if it meant having a good online network like the other companies, but that's just personal preference. that stuff does require money to maintain you know.
As Nollog said, they would lose all their money if they went that direction completely, but there are some obvious changes they can make that won't cost them much that will make them competitive. They really need to launch last, or at least reveal last this next generation so they can make sure they have tech similar enough for third parties to port most games fairly easily. This way they can make sure they have similar architecture (x86 , powerPC. etc).
Another obvious change and in my opinion the biggest flaw of the Wii U is bringing back analog triggers. this one speaks for itself. Those alone open up the entire racing and fps genres to Nintendo systems. Neither of those changes will cost them billions of dollars and they can reap huge rewards.
As for something I would like to see Nintendo do that is unique, but could be competitive if marketed correctly and planned for financially, is to develop a technology that basically lets servers dynamically switch between configurations for various games. Basically have a server network where servers rotate between the settings for hosting matches of various games. Basically servers wouldn't have to be retired for one game, or even one generation, because the settings for every game that is on a Nintendo device had server settings that just get called and set up prior to a match.
^that was very hypothetical. let me know what you think of the concept without considering cost etc.