I don't think it was the smartest move on Rare's part most of all. They now have to spend a painful amount of time retraining their team to program for an altogether foreign console. Not only that, but regardless of the new product they release, they will still have to spend a great deal of time erasing the stigma that games like Banjo-Kazooie have stamped them with.

Overall, the fact is, this is just one of many awful mistakes Nintendo has made in the past. Dissolving their contract with Square is the biggest example I can give. But, regardless, they always seem to pull something else out of the air, and remain a strong competitor.