Well, you are just missing one point:
There will be just one tablet with console-like-games and Nintendo-games. Also only one tablet which games are tailored to the exact hardware. This will be the selling point.
Edit: This is the blue-ocean-strategy. Create a market which doesn't exist before and cater to it, because you have the advantage of being there first and having your second-generation-products on sale when the competition is busy copying your first-generation-product. Nintendo did this with DS and Wii, big markets which didn't exist before.







