This is largely true, even if there was more than one developer putting exclusive out on GCN (Capcom, Lucasarts, and Sega all spring to mind). However, I’m still not convinced that was all the result of decisions made during the N64 era so much as it was simple marketplace conditions at the time of the GameCube’s launch (the near-identical sales of the Xbox support this).
That’s simply not true; Nintendo sold Rare as they no longer considered them valuable to their company:
*"Nintendo was given the option of buying the remaining un-owned portion of Rare. Nintendo declined. Instead, Nintendo received $183m from Microsoft for its position. According to Peter MacDougall, Executive VP of Sales and Marketing with Nintendo of America, “Nintendo had the ability to continue its exclusive relationship with Rare, but in looking at the company’s recent track record, it became clear that its value to the future of Nintendo would be limited… In other words, we passed on this opportunity for very good business reasons.” *
The situation’s a lot more complex than you make it out to be. It’s true that the result of whatever actions took place was the creation of the PlayStation. But again, to frame it as “like they were actively trying to kill the company” is a debatable truth revealed only in hindsight. The reason the deal was originally dismissed was because Sony would have, due to a prior contract signed with Nintendo, retained full-control over any game using the SNES CD-ROM accessory. It was essentially a damned if you do, damned if you don’t scenario.
Yes, the PlayStation sold more units. That didn’t stop Nintendo from being massively profitable during the 64 era regardless–at no time were they ever close to “failing” by any monetary standard.
Virtual Boy and what else? The 64DD, maybe, but that’s specific only to Japan–and even upon it’s release, it was pretty clear Nintendo knew its place as a niche product, as indicated by it being sold only via mail-order.
I’m not exactly sure what this “change over” is that you speak of…Iwata didn’t become president until 2002. Again, the GameCube is Nintendo’s worst faring console, and I disagree with your original premise that there was a “dramatic improvement in quality among Nintendo products since about 2000”–in my subjective opinion, products made post-2000 were generally much worse, and this was reflected in sales of the console.