The PlayStation is too...settled-in for Nintendo to take a hold over it. Besides, The XBox overtook the GC in terms of sales (Except in Japan) anyway, pushing the GC into third place.

The thing is, the general public (well, outside of Japan) don't want games like Zelda. They want things like GTA. Even if Zelda is better than GTA (Which I don't believe, but some might), it's sales that matter. Nintendo just doesn't have the "cool" image of Sony. What's cooler, going around as some elf on a talking boat, or blowing someone's head off with a shotgun and then stealing their car?

Without a good image, Nintendo won't sell. If you don't sell software, you don't make money, and if you don't make money, it doesn't matter how good your games are. You're finished.