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RolStoppable said:

I understood the "powerful" and "third party" comments as "a capable enough machine to get good third party support all around", but the machine you describe here will be one that is going to be seen as Nintendo withdrawing from the home console market.

The Wii U's internals may not be large, but still pretty big if you were to cram them into a handheld. There won't be a disc drive in the handheld, but in exchange it needs a battery. Just because they have twice the engineers to make it happen doesn't mean that things will become half the size, if that's what you were getting at. The consolidation of the R&D centers is more of a measure to achieve a more direct exchange between the ideas and progress of the two different teams. I don't think it makes much sense to work on such a dual-console.

You know that besides these technological issues, the price still remains. The Vita (as a handheld that is one gen behind in processing power) is powerful, but also too expensive as a handheld. It's not even profitable at $250, otherwise Sony wouldn't have seen the need to sell overpriced proprietary memory cards separately while providing no internal storage. If Nintendo made a machine like you proposed, it could very well not be impressive enough as a home console and too expensive as a handheld, caught in the middle of nowhere.

I understand your points, but in light of U's launch window sales, and given that the U could be priced cheaper (and as such loss-leading), it would be foreseeable that the next console would also be loss-leading.

However, rather than loss-leading on a handheld and on a home console, Nintendo could consolidate their loss-leading strategy on the next system.

Granted the Vita is expensive, but if it's only the Vita that is the main product with twice the games on it, the profit from the games would offset the loss-leading.

On topic of your first para, if the U is considered not adequate in terms of performance for 3rd parties, U2 being a U to PS4 gap with PS5, then it's something the market is used to. At this point the cutting edge can only do so much imho.