M$ changed the game once they entered the console biz. After GCN, Nintendo's focus shifted to be "different & cheaper" than the competition. What's interesting, is with the Wii's surprise success, and M$ gaining market share from Sony's PS2 fanbase, Nintendo was in great position to further crush Sony. By releasing a proper next gen console, similar to what 360 did, Nintendo would have flourished with the crucial 1 year head start. Instead, they continued on their "different & cheaper" route.
Gamers or avg joes tend to think all these companies hate each other, but companies like Nintendo have different strategies in mind. Ninty is on record stating : they hate competition. so lets say Sony was forced out, could Ninty go toe to toe with M$? Definitely not. Reality is, Nintendo does not want to step on Sony's toes, to allow THEM to fight M$, while Ninty maintains their conservative/passive role. Now if M$ decides to leave the hardware sector, that's when you'll see Nintendo become aggressive with the western market again (focus on specs, online, etc), since the void left by MS would be too lucrative for Ninty to ignore or cede entirely to Sony.
The Fusion concept would continue on the "different & cheaper" route, while hopefully attracting more 3rd parties. The home dock's specs of the Fusion depends on if M$ is still in the HW biz. As far as what the future holds, the next gen will be the most interesting to me by far. I expect big changes...
