Nintendo used to put out the same sort of product Sony did. They couldn't gather the third party support and couldn't compete in sales. That's when they decided to put out non-conventional products and never looked back. They found success in being purposely different.You are correct about Japan, but Nintendo isn't avoiding anyone. They are just doing their own thing.
PlayStation abandoned Japan for the west, Western style console games now take to long to come out, have the weird "woke" culture difference, cost way more to develop and are overall stale. On top of players having access to more games and being way more critical and picky over games that don't check certain boxes.
Ironically enough one of the more critically acclaimed games in the last couple years is from a Japanese studio they basically all but shut down. In the meantime Nintendo (and mobile)'has basically completely taken over Japan.
It clearly was a great idea because their products are different enough that the gamer that buys a Sony product has no issue buying a Nintendo one as well.
It's been almost 20 years since Nintendo tried to compete on hardware and they likely never will do so again.

