I doubt they think it's a flop, they still have time and the resources to give it a good solid go. I do agree with the 3DS though, that is the number one thing on there agenda! I see no reason for Nintendo to release a console before 2018.  

See you are mistaken ....they have had quarterly losses recently and that was because of reorganizing and R&D and if you look at Nintendos fiscal report yearly ...they only took a loss last year in fiscal year 2013 they had a operating profit of 78 millionth 2012 ....Nintendo will be looking at a profit off their wii u and 3ds model from now until the generation ends because every wii u sold is at a profit ...not a loss when they first released the system at a loss...also you are forgetting most profit is made from software not hardware in which that is where most of their profits are made from first party software ...why do you think Nintendo doesn't really care as much as why they are not getting third party because they make large amounts of profit off first party whereas their is no middle man(rockstar,EA,Warner,) all nintendo profits......that is why they are the only ones that can live without third party software and still survive.......Nintendo as a company has zero debt and billions in the bank ...as long as their software sells in the millions they will be ok ....I'm not saying they do not have to adjust in some areas but nintendo will be alright and always just survive whereas the other two lose money by money hatting  third party exclusives and selling their consoles at a big loss and make up for it in their 3 or 4 year ...even Sony said they want their exclusives to sell a great amount and Microsoft 

to provide what seems to be a missing perspective, i never have and never will own a handheld console. i don't travel much so why on earth would i play on a small screen when i have a tv to play on? if the new system ends up being like the ios joystick and a ds at the same time then technically i'd get a handheld.

they arent just baseless rumors, Iwata and Miyamoto have heavily hinted at such an idea many times this year.

Corollary of the "Any hardcore Nintendo system will flop" theorem.

I like his fusion more. Because a portable fusion will be unnecessary expensive. 

If I just want it to be "on the go" i still have to pay for a HDMI connector and bluetooth for 4 controller support etc etc.  Also it will limit the Fusions horsepower since its portable.

And if I just want the thing to be a console I would have to pay for a probably 5" HD touchscreen  buttons slide pads battery etc.

Having 2 seperate systems one for your TV and a portable one gives you the choice.

And btw having 2 systems that run games in e.g 720p medium and the other at 1080 ultra  does not in any way kill the portable at all.  There is just 2 devices isntead of one. The portable probably has no option to add 3 bluetooth controllers etc.

Why is it always the same argument of phones hurting handhelds because of the masses of cheap games?
Has anybody ever thought about phones and tablets still being just phones and tablets? Maybe people don't want to carry another portable device or are busy with their messaging (I know almost all people on public transportation are) and then start a cheap game every once in a while. It's definitely not like mobile gaming on smart devices is way more popular than dedicated gaming devices. It may sell more but I won't believe anyone saying mobile games are played more (I played some stuff for 2 minutes and never touched it again; paying $2 with a gift card didn't hurt me) or deliver any kind of atmosphere.
Making gaming handhelds more capable and interesting, that should be something to think about. Not talking about how everybody wants casual mobile endless bird popping games, labeled with "Mario", and definitely not "AAA" on phones; make the AAA gaming more like phones and you have a real "Fusion".

What at first sight might seem like a bad decision, of making every game work on both consoles, the truth is, even with some unseen tech in console gaming, developing games that can run on both systems is Nintendo's only real answer to today's gaming challenges.

The idea of making every game work on the 2 systems might give the idea that Nintendo will sell less consoles because, well, there are no system exclusives. So why buy the two consoles?
But what if Nintendo sells the consoles not as separate entities but as an ecosystem?

What i mean is, why not pack in both systems and sell them for less than buying them separately? 400$ together, instead of 450 or 500, alone? PS4 and XB1 seem to be doing great at their respective prices.
The tech on the HW and the controller would be the same, so, just make it the handheld work as a controller and when you can't play at home, play everywhere else.
Streetpass/Spotpass on your home console!

If making games work on all systems might lose some customers, by selling one game in two systems would decrease the risks of failure - thus reviving older franchises - and increase the chances for profits.
Also, by developing automatically for two install bases, would allow to make better deals with 3rd parties, western and japanese.
Those games that you can only play if you own both systems, would be a thing of the past.
Nowadays, if you can only own a Wii U, all that japanese library is out of your reach. But with an ecosystem of Nintendo HW, that would be a thing of the past.

For Nintendo it would be like supporting one platform and reaping the benefits of two.
With the increase in development costs and more people beeing needed, they could still support that ecosystem with ease.

And this is where things get interesting!
For generations, we have seen franchises beeing left unctouched for years before they got revived.
For exemple, Metroid skipped the N64; Starfox basically skipped the GC; F-Zero skipped the Wii.
But if they are going to support one ecosystem, how can they afford to skip franchises? They do need the games there.

And not just that, they will be forced, by the own creation of a ecosystem, to actually develop new franchises - be it 1st, 2nd or even 3rd party.

They have always created new IPs over the years, but how many were of the level of Mario, Pokémon, Zelda, DK, Animal Crossing, to name a few? With more needed, we might just see the next Mario or Zelda.
We could also see the Mario and Pokémon franchise being less used; we could get one year a 2D Zelda and another year a 3D one or a 2D Metroid and a 3D Metroid after that one.
I can already see franchises like Mario, Zelda, DK, Metroid, getting the 2D and 3D treatment to please all gamers!

Who wouldn`t like being served with the best Nintendo franchises in both 2D and 3D, in the system or systems they own?
I know i would!

My thoughts on the Fusion idea:

The clear benefit is that Nintendo can focus on ONE system, on ONE ecosystem instead of two. They'd release a hell of a lot more games, thus avoiding the droughts we've seen on 3DS and Wii U.

The games could/would range between AAA level and portable and indie levels, and Nintendo could offer them in accordingly price ranges; $60, or $30, or even $5. You could play a $60 AA Zelda game on the go, or a $30 platformer on the big screen. That gives the costumer options – we looove options!!

The important thing is to make the games scalable! Lower textures and lighting on the portable version and higher on the home version, kinda like the PC's already doing. I'm pretty sure that this would save Nintendo money in the development department; not having to spend $10 million on the next Mario, maybe $5m would suffice.

Nintendo wouldn't be dependent on 3rd party support (which most often is sorely lacking on their platforms), since they'd spit out a game or two EVERY month!

Speaking of 3rd parties; with ONE ecosystem with TWO devices the instal base would be a lot bigger than on only one console with one ecosystem, the cost of porting games to the Fusion would be a lot less risky since you could cater to a lot bigger audience. And let's remember that Sony probably won't make a new handheld after the Vita (the handheld market is a lot smaller these days, and Nintendo is dominating that market). There obviously IS a (somewhat small) market for AAA experiences on a portable device; just look at Call od Duty and Assassin's Creed on the Vita. 3rd parties could cater to this market, AND to Nintendo fans – at the same time – by porting games to the Fusion. Ain't that a treat?

I'd sell it in THREE (3) different SKUs:
Only the Handheld, bundled with a HH friendly game (say NSMB or a 2D Zelda) for $200/250
Only the Home Console, bundled with a “pro-controller” and a HC friendly AAA game (say 3D Mario or Zelda) $250/300
Both devices and bundled with a game and maybe a pro-controller for $400