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M.U.G.E.N said:

I think it depends on many factors to see if the next gen consoles will actually bleed money. I do not think vita is selling at a big loss (might even break even soon) at the moment. The issue is making up for the R&D and such. I think sony won't do the ps3 route this gen but take a route similar to vita in hardware. Dev friendly and made up of off the shelf parts for the most part and will exclude the cell. The thing with home consoles is that just like currernt gen, big publishers will push for bigger better looking games. I personally see the wiiU tablet as a mistake. I think they should have used the cost of that into making the hardware more powerful. Then they would have had a strong enough hardware to avoid a potential situation where devs leave them behind in favor of the other two + will result in a system with Nintendo 1st party and all the good 3rd party games plus motion controls. That's the problem I see with differentiation stratergy, it's high risk high reward.

I completely agree, and the screen controller impedes on any more budget that could be injected into HW performance (R&D costs for dual-screen tech, cost of screen amortized in console sale affects price, dual-screen requires dual rendering so affects performance). At the same time, the strategy you're proposing was used twice by Nintendo to no avail. Once with the N64, another time with the Cube. This far the handheld, DS, Wii lines of business have been working well for them, it's only sound to expect more high reward for more risk, it paid off most of the time in the past (bar a poorly executed case, the virtual boy). With that said, if the WiiU does fail, then Nintendo will have to re-evaluate and you would be right. But at the point in history where we are, this really is the best solution for Nintendo as their history would ask of them.

On the flipside, Sony's new strategy with Vita holds alot of promise, and I do agree with you that the PS4 should follow a similar, much more balanced approach as compared to the PS3. If the Vita is the blueprint for the PS4 that's the best way to go for Sony. But for Nintendo, it's a whole other history with very different strategy.