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$149-$169 doesn't necessarily mean super cheap hardware.

It could be a very noticeable upgrade over the Wii U.

They probably will have to ditch AMD and IBM for sure though. There are cheaper/better options now.

800 GFLOPS + 3-4GB of RAM say ... for Nintendo would be a ton of raw horsepower to make their games with. 

Third parties won't support Nintendo that much anyway, so who cares. They haven't for 20 years now so it's not like this is some new development.