I agree, their hardware sells because of their games. Profits are in game sales and not hardware though, so why sell proprietary hardware in the first place, if it just vastly limits the audience for your game sales?
Nintendo see themselves as a toy company, in fact they still make non-game toys.
They don't make consoles as a "CPU+GPU+GAME" they make toys, for example this is why they invented some back then outright bizarre stuff, like N64 funky controller and first 3D platformer games, Wii and Wii controller, that board controller, and so on.
Nintendo doesn't like making games, they like making toys, the fact that their best product are consoles+first party games doesn't change this fact, if you look videos of they designing stuff, you will see that their first games for a platform are usually designed alongside the console, with game designers making prototypes of potential controllers and designing not a game for a console, but the console+game pair that fits their goals.
Then, they accept third party games as a "bonus", but it is NOT their focus.
