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Soundwave said:

To be honest even as is, Nintendo's games look great on the Wii U. It's not like the Wii/PS3/360 era where going from the PS3 to the Wii was like getting cold water thrown on you. 

Mario Kart 8 and the Zelda walk through still look really great to me even after playing PS4/XB1 games for hours. 

For their own needs Nintendo doesn't really need hardware much more powerful. 

Exactly. If they had more power, they could technically aim for 1080p, or a higher frame rate, or other things -- but I think the real limitation is on the costs of those enhancements, not the power required to reach them. I think that for most games Nintendo would prefer to use 720p assets, as 1080p textures simply take more time and money to make, and so on. At least for the immediate future.

Couple this with their recent efforts to directly court third-parties and I think you have Nintendo's next-gen strategy outlined. Low-power, low-cost hardware, lots of exclusive software made and funded by Nintendo themselves.