I don't think NX will make any difference regardless of form, to be honest. Japan as we know as a gaming market is gone.

Only time will tell. You aren't the only one who as brought up this conversation over the years. The same conversations were started about DS and Wii but we all know where that went. Maybe the NX will incorporate dedicated handhelds and Nintendo's smartphone titles on one device. Who knows. I'm not saying that Nintendo will produce another 2004-2012 era but they shouldn't be counted out until more information is released about NX. I will say that the smartphone market is increasing rapidly and I think Nintendo should capitalize on that and start making more robust experiences on smartphones. I also would like them to work on a standard controller for smartphone gaming. Who knows where they'll go with this. I'm sure excited to know.

It's clear that japanese gamers are moving to smartphones.
So, unless NX has some crazy new idea, then no.

Fortunately for Nintendo, they have a strong line-up (1st party and 3rd party) that allows them to fight smartphones.
With that in mind, there are 2/3 ways they can continue to be relevant.

They will have to make more mobile games to not let kids grow just on mobile devices;
They will really need to create more franchises that core japanese games can't pass out (thus streamlining software production is vital);
What kind of HW will they put out as an handheld? That might be a winning or losing point for Nintendo.

For example, what if their next handheld comes in two versions?
Both versions have 2 screens, but instead of being stuck with them, you can take out the upper part and insert the Nintendo Android device that you can purchase on the side and works on it's own almost like a smartphone.

The Japanese market won't need any saving anymore when the PS4 kicks in full gear.

I think there are a few options for saving it, and NX is one of them... depending on what it is. One of the following things could work:

1-The Monster Hunter option. IE, Nintendo needs to draw in major Japanese third party content. To clarify further, if you look at the gen on gen handheld market in Japan, 3DS did moderately good in comparison to DS, but at the expense of Vita. Monster Hunter switching platforms killed the Playstation handheld market but kept the Nintendo ecosystem vibrant. If NX - whatever it is - were to be host to other titles like Metal Gear, Final Fantasy or Dragon Quest... or better yet all of the above... in addition to the Nintendo games that are popular there, it could be a solid hit and perhaps become a bit of a craze that could even grow the industry back a bit.

2-The Fusion option. The popularity of the mobile market is clear. If Nintendo links its handheld and home console systems, this could present an extra attractive gaming option.

3-The NXablet option. If you can't beat 'em, join 'em. NX could be a dedicated gaming mobile device, like a phone or tablet with physical buttons and controls, one that plays apps and also classic-style games. This could potentially be a home run if done right.

4-The "Wii" option. Something new, unexpected and exciting. This option always works. Mobile is the craze right now, but if something new and fresh that can't be repeated on mobile is offered, people will jump all over it like they did their Wiis.

Ideally the solution to the problem is a combo of some of the above, such as #1 and #4. A major flaw of Wii was it offered a great experience and fresh concept, but didn't offer the classic content to hold traditional gamers beyond the generation. Any new device should try to do both.

Mobile deffinitely isn't the future of Japan. It's the present of Japan.

I don't really see the PS4 selling much better than the PS3 in Japan. So if that's the market leader in Japan, that would be a disaster.

NX, if its a portable, or a Fusion line that has a portable component, will overtake the PS4 fairly quickly.

Yeah I hate to say it, but I'm starting to lean towards Nintendo may need to have something radically new within the NX beyond just the fusion concept itself. There needs to be something that shakes up the industry, but I don't see an obvious direction for them to go after. Going after casuals/women was fairly obvious with the DS/Wii because that was literally half the population that no one was making games for. 

But that audience has become mobile's biggest audience. So that's kinda out. 

Yes and no, there are a handful of really successful 3DS third party games, but one thing I've noticed with the 3DS in Japan is the "mid-tier" successful game, the game that kinda comes in and sells a solid 300k-400k on portable is starting to basically vanish. 

Like Bravely Second ... this is a game that probably should when you look at it sell 250-300k at least. It probably would have on the DS. But now it's around 100-130k, so I can kinda see why a lot of Japanese developers are kinda bailing out on supporting even the 3DS with a lot of software, unless you have Monster Hunter or Dragon Quest or Yokai Watch (the big three Japanese third party IP alongside Final Fantasy), the handheld market is really hit and miss. 

Mobile games are probably a lot cheaper to produce than even the average 3DS game, so there's that too. 

If the NX is a handheld, it should still be very popular in Japan... so yes?