Games. Its all about the games. Has nothing to do with "buttons." People buy 3DS because they want to play the great games on it. Especially in Japan. iPhone games are "good enough," but will never approach console level production, until game publishers are willing to invest the same amount of money in iPhone titles as they do in console titles. And more importantly, until users are willing to PAY for it (not .99)
As long as Nintendo continues to have franchises that millions of gamers around the world adore, they will continue to exist. Software sells hardware. The issues of Nintendo "hemorrhaging" money had to do with selling new hardware at a loss, which has since gone away with the 3DS. And the WiiU hasn't HAD software yet, thus no sales. Which will once again change later in the year. Handheld systems will always sell very well in Japan, because of a difference in culture there. Japanese love handhelds, due to a different lifestyle. They also love games like Animal Crossing, which is a Nintendo franchise.
People seem to forget Nintendo made boatloads of money on Wii and DS, because they were smart enough to sell hardware that was PROFITABLE (unlike Sony and MS). Nintendo can make a few mistakes without running through their money.