I will disagree strongly with MP here. Nintendo made an absolutely brilliant decision with the Wii's technical aspects. To say they were "out-hardwared" implies their decision to compete (hardware-wise) on gameplay rather than graphicz was unsound and if anything the past 8 years have shown is that it was the most brilliant decision by Nintendo on the past 10 years. While MS and Sony buried themselves deeply in financial troubles and we can say their venture in XBox and PS3 was barely profitable if at all, Nintendo's profits were through the roof. To dismiss this decision as "out-hardware" denounces precisely the same biased bad thinking that made MS and Sony make the huge financial blunder they did.
I also disagree they will do your strategy. I agree those two companies share similar traits and philosophies (they are both vertically integrated and care about design, etc.), but precisely for those reasons you won't simply see Zelda on the iPhone. Zelda and Mario work as means to sell their hardware, not otherwise (like their competition), and if they sell it on the iPhone / Play Store, they will have to compete with 2, 5 bucks games, mind about piracy, and worse of all bring to the minds of consumers they won't actually have to buy Nintendo's hardware to play those amazing games they have.
I can see a mixed strategy where you could have an app on an iPhone or the Apple TV, coupled with a Nintendo hardware of some kind in order to play this or that game. I haven't thought much about what they *can* do, but I think I'm in solid ground on what they both *can't* and *won't* do.