Here's an old post I made on the subject,
I see the article -rightly so- cited Sega as a has-been hardware console maker that turned 100% "soft". Yup, they sure did that, but they also kept selling arcade machines and even selling their games for the consoles of their once arch-nemesis, Nintendo, reaping all the benefits that this distribution channel has, namely very low nominal piracy rates. Not a bad move, at least for Sega.
But if Nintendo too chooses to forego the hardware industry themselves, instead focusing only on virtualization services or generic mobile platforms, they risk exposing themselves to just as much piracy exists on the PC, where not even "Steam Exclusive" games are safe from repackaging, let alone Android or iPhone apps.
They will also soon discover that most mobile platforms will put unprecedented -for a company that designed games for fixed hardware, at least- constraints on game development (e.g. not all smartphones have a minimum common set of hardware capabilities and guaranteed performance, except maybe Apple's iPhones), and thus be obliged to either tone down their titles tech-wise in order to make them playable on even the lowest end Android device, or resort to designing some sort of specialized mobile platform, perhaps in collab with e.g. Apple, which is very performance-alert and scrutinizes official apps.
TL; DR: Nintendo will lose the advantages of designing games for well-specified hardware and the anti-piracy perks that come with it, if they choose to go the "virtual" or "mobile" way. Let alone that the games Nintendo is best known for -Mario etc.- don't "translate" well to touchscreen controls, unless they resort to making only Angry Birds-type games, too.