Does Nintendo Understand The Threat They Face?

Iwata’s GDC 2011 keynote speech is still making some rather large waves. More than a few people in the game industry believe that Nintendo is going to be heading down the wrong path in the next few years, and the decisions they make could end up taking a lot of wind out of their sails. Does Nintendo fully understand what they’re up against, or are they coming at things with a skewed perspective?