I think they are having better relationships with third party developers. I mean, how could Mario + Rabbids have been possible if Nintendo wasn't willing to let Ubisoft borrow their most valuable IP? Then you had Platinum Games being able to go for their vision with Bayonetta 2 with the help of Nintendo when others like Sony and Microsoft didn't want to at the time. And how come all of sudden did Bethesda became a solid (albeit early) contributor to the Switch's success? Unless you mean giving out some money under the table to get more support from third parties like Activision and EA or something.

As for costs, it depends on what their developers want ultimately. Koizumi seems to do alright with Mario Odyssey and Aonuma the same with Breath of the Wild. Same with Yabuki with ARMS, Nogami with Splatoon 2, Sakaguchi (who directed Splatoon 1) with Labo, among others within Nintendo's development teams.

I think Nintendo is still Nintendo, the good and bad, after all these years. Even with underpowered hardware, they have been able to create great to incredible games like Super Mario Galaxy, Super Mario Odyssey, BoTW, Xenoblade Chronicles 1, X, and 2, Skyward Sword, Fire Emblem Awakening/Fates, Pokemon, Animal Crossing New Leaf, Wii Sports, Kid Icarus Uprising, Smash Bros., etc.

I'm sure some would like to see Nintendo games have $100+ million budgets invested on 4K, ultra-realistic graphics, with A+ actors, and stuff, but that's not what has been Nintendo's philosophy since they started in the gaming industry. Their focus has been gameplay first and they like to seek trying different things with either new or existing IPs. I don't think Nintendo and their developers are about high-end technology, but more on how can they utilize the tech to create something that's in their DNA. I mean, you have Yoshiaki Koizumi and Shinya Takahashi spear-heading the development of the Switch. Even Miyamoto confirmed that its development was done by younger employees. That's just how they operate.

They could make a PS4 clone if they wanted, but it would not be as successful as the Nintendo Switch.

Nintendo has chosen to pioneer hybrid gaming, consolidating and streamlining development costs (time, money, manpower) of home console and handheld console into one, while gaining very healthy profit margins (far more than it did with Wii U and 3DS).

They are diversifying with iOS and Android games, theme parks, movies, amiibos, merchandise, etc. to buffer the slower years that may happen when only doing 1 console instead of 2 and they are well set for the future.

For some people, Nintendo Switch has made gaming on a TV obsolete or a side option.

So, it will be curious where the market finds equilibrium with this (as much technology use is focusing more and more on on-the-go use rather than less).

Maybe each market niche is steady for many more console generations, maybe traditional consoles end up with too small of a user base to justify developing a larger budget demanding successor, maybe something new makes it all obsolete.

Many possible outcomes... but as far as current trajectories I think Nintendo making a PS4 clone is a much less than 1% probability.

Your disagreement lacks merit. You basically state that Nintendo's tradition of innovating prior to Gamecube doesn't exist because Sony hadn't made a console yet. But your conclusion doesn't follow the premise.

Because Sony copied Nintendo's innovations later, does not mean that Nintendo didn't make those innovations in the first place. When the d-pad was introduced on the NES controller, shoulder buttons and diamond config on the SNES controller, analog sticks and 4 controller ports were introduced on the N64, these were still innovations made by Nintendo; Sony copying them doesn't change that fact; not any more than Sony copying motion controls after the Wii's success. Gamecube was not innovative, but this was the exception to the rule (as I already pointed out) in a similar way to how the additions to the controllers for the original PSX was Sony's exception to the rule.

Aside from Gamecube, GBA, 3DS, and Wii U, Nintendo's tradition has been to advance or expand the way we interface with videogames. 
Aside from the first generation of Playstation, Sony's tradition has been hardware updates, maintaining the first generation Playstation concept.

You have failed to show that Sony's tradition and Nintendo's tradition are equivalent.

I've wondered this myself. Xbox and PS have always had comparable hardware (in terms of power), so multi-platform games that end up on one, usually end up on both. If Nintendo went back to making a home console as such, maybe they would receive a bigger share of the multi-platform titles.

However, I feel as though the home console is coming to an end as we know it, so no, I don't think this will ever actually happen.

If Nintendo had the same power as the other home consoles, yes they could. If you think they cant you really underestimate how well known their IPS and the name Nintendo just is.

If we´re not counting the Wii sure but then you look at the competition the other generations, N64 had small third party support them using cartridges instead of CDS was their downfall and the Gamecube much like the OG Xbox couldnt handle the PS2 nor could any console ever. The 360 & PS3 generation they won with the Wii and the Wii U is a flop for very obvious reasons (Name, Marketing, No games at launch, No third party support) They learn from their but if they make a console that is just like the competition they´d do 50 million. And im pretty sure its hard to argue that Nintendo first party games are of a size neither Sony or Xbox can handle with their own IPS. 

Of course they can. Console type doesn't matter. Only games. Switch successful because of Zelda. Mario Odyssey. Not because of hybrid type.

They would at the very least and for absolutely sure sell one unit as I'd totally go for a DEDICATED home system from Nintendo. I'd love to play some of their titles on my TV in 1080p 60fps, 4K is not even necessary but you need a certain amount of processing power to achieve this and I don't see a hybrid getting there any time soon.

All this talk about controller innovation, you're telling me that no other company tried to be innovated with their controller in their in their own ways? That Nintendo was the only one that tried to be innovative in that department.  Every company in the business feeds off each other and try to make it better by innovating in their own ways, but seems to me that you only think Nintendo is the only one doing that.  I mentioned the Dreamcast controller, I thought that was innovating.  While i do agree that Nintendo innovated a lot but to think that they're the only ones is just being blind.

I failed to show Sony's tradition? I did mention MS too.  Your whole post is nothing more an attempt to only put down Sony while glorifying Nintendo when there's other players in the market like MS, Sega that I tried to bring up in my post too.  Seriously, you only mentioned Sony and no other company.  And dont forget third party accessories that tries to innovate on controllers for home consoles and PC (there's been sooo many different PC controllers made its not even funny).  Sidefact, a third party motion controller similar to the wiimote was made for the PS2 before the Wii came out, that's innovation right there too for that controller company. 

The fact that you disregarded every other player about innovation and focused only on putting down Sony, your whole statement lacks merit.   Try again next time and hopefully you'll think outside of this small bubble of only between Nintendo and Sony.  There's a bigger world out there and everyone's trying to innovate somehow.