Apple and Google already own the lion's shares of that market. It would be stupid to enter that hardware front stuffed with competition. From super high end, to low end phones. The big mobile and electronics manufacturers have it covered.. hell, even chinese brands are making waves here in the west with their cheap phones.
There are two cases I've seen of companies that have tried and enter phone market with gaming hybrids, and both ended up as complete failures; Nokia with the with N-Gage, Sony and Xperia Play. Why is that? Simply put, there isn't a market for clunky mobiles with physical controls. A mobile with Nintendo label on it isn't going to turn any heads when there are shiny new Samsung and Apple phones around the corner, with; superior specs, looks and engineering that appeal to casuals. And non gamers need not even bother.
If Nintendo goes too high end it would kill the market available for the younger demographics. And potentially cut off a huge part of their userbase. We've already seen this happen on the PSVita. Adding mobile capabilities is only going to add unnecessary cost to the device.
In short, it's a terrible idea and Nintendo shouldn't do it.
