Considering how Nintendo is starting their "Quality of Life" business, they seem to think the answer is diversity. Nintendo is a bit too small to support both their consoles and handhelds as much as I'd like, but they're too big to be handheld-only. And besides, having all their eggs invested in the handheld market is not a safe strategy. A single bad product could cause much more harm to Nintendo that way.
Nintendo's main problems generally root from their inability to release as much software as constantly as preferable. The only reason I can think of to support your idea would be if it increased their game output enough to compensate for all the disadvantages.
That said, I'm going to think about what a handheld-only Nintendo might be like. I might revisit this thread with some new ideas in a short while.
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