Well, dedicated handhelds have lost their zest more or less completely and they can't compete with traditional home consoles, so this makes a lot of sense. Whether or not it will work is another question, but it's their best chance by far right now to go for a solution like this or similar to this.
I've been saying since the before the Wii U released that Nintendo need to break their traditions and re-invent themselves; this could be it!