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You're right that Nintendo will stay many years behind the curve as they've been doing since the Wii/DS.

However, 720p might be far enough behind the curve at that point. I mean, my next phone is about to have a 2K screen, so screens are advancing quickly. By the time the 4DS is ready, 720p screens might even be cheap enough for Nintendo to consider. Maybe. They probably won't be awesome OLEDs or anything like that, mind.