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This is more about image, pedigree and connection than sheer funds. The modern core market is just not somewhere Nintendo would perform very well; they have done their own thing since the beginning and suddenly changing that won't make a difference, they would likely have perished already if they applied this mindset in the 90's.
Surviving on niche customers is better than being eaten alive competing for the mainstream, the market quite simply can't accomodate three consoles targeting the exact same group and someone would have to go, it is no huge mystery who would most likely go under first under these conditions.