The rumour describes it as an upgrade but I do think it'd make sense for them to just wait til 2018 for a new console that'll blow Neo and anything else out the water. Have it fully BC and port all games to X1 through to holiday 2019. The iterative approach can follow on from here.
In terms of competition NX should be the easy winner if its actually a fair bit more powerful than PS4. Unlike the 2 upgrades it'll actually have its own exclusives, which will be a good selling point to the 80m people who will already have a PS4/X1 by time of its release. I could be wrong but I really don't see third parties making tons of use of the 4tflop GPU on the Neo any time soon. Nintendo would be smart to instead double down on the CPU and secure 60fps on all current gen games, something the Neo won't be able to manage based of the rumoured specs.
In the event that NX is weak then it means they're going the gimmick route which if successful should remove the idea of them directly competing with Neo/X1.5
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