why on earth would they do this?
first of all they are limiting the amount of money that they can make. fans buy both the console and the handheld and buy games for both, so basically nintendo makes more and more money. if they make it a the fans of the hybrid would eventually buy one console, and the games for it. instead of making two mario karts on both consoles, they just make one, and just profit from one
the second thing is that they would increase their chances of failing, i know nintendo portables always sell well, but their home consoles dont always do that. another thing is if that this hybrid fails to meet expectations they have nothing else to fall back on.
also it would no way in hell dominate, the product you suggest would be extremely under powered compared to other consoles, cell phones still cant match the quality of the PS3 or xbox360 and wont for a long time, if in 5 years nintendo releases this with the power of the strongest smartphone it still wouldnt be able to reach the power of the PS4/720 and by then sony and ms would be getting ready to release their next gen consoles at the time, so basically it would be EXTREMELY under powered, and it wouldnt have third party support, and its just common logic that there is no way to dominate without 3rd parties
