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From a design point of view, just because you're using two screens playing WiiU, it doesn't mean all 3DS' games will play just fine.

You have to upscale resolution and it would still look bad.

People thought the 3DS was nothing but a new version of the old DS. People still think WiiU is a Wii accessory. Adding a functionality to a product consumers don't even know exactly what it is might be even more confusing.

Nintendo would canibalize its own portable market.

Nintendo would be admiting WiiU is nothing but a glorified 3DS, like some say.