Hmm, this is a bit of an exaggeration. The Gamecube was considerably more powerful than the PS2, (and Microsoft took a huge dive on the original XBOX hardware in order to compete - although it was indeed more capable than the GC).
The Wii was the first time Nintendo explicitly entered the market with hardware knowingly less powerful than their competition, and that was... 2006? So like 17 years, not 30.
You could make a case that their handheld hardware was always "underpowered" compared to the competition, like the Game Gear and PSP, but the justification at those times was better battery life and pocket-ability. The market results seem to speak for themselves, though
A lot of western pundits (and major studio executives) have been expecting Nintendo to "go third party" like Sega ever since the Gamecube, and yet they're still around. They seem to know what they're doing.
No? The n64 was a graphics powerhouse, literally SGI tech in a cheap box you put in front of your TV. The gamecube too was very powerful, at least compared to the PS2. The GameBoy Advanced was a pretty powerful 32 bit ARM system.
It wasn't until the Wii that Nintendo gave up the tech arms race, because making games people want to play and marketing to the people who aren't turbo-nerds about half true specs turns out to be way more profitable.
