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I don't really get the thesis that Nintendo and consumers are better off if Nintendo quit the hardware business.

Nintendo would lose money from sales of hardware and accessories, and lose out on licensing fees. It would have to start paying them instead. Plus it couldn't control its own OS or general gaming ecosystem. It would have to conform to the standards of a different manufacturer. For a company strongly dedicated to the idea of self-determination, it doesn't make much sense.

Consumers would lose out, too. Divorced from the hardware game, Nintendo would most likely fall back to a select few highly profitable franchises or perhaps quit the industry altogether. There aren't many examples of a hardware manufacturer diversifying and innovating after it stopped making hardware. There are several examples of the complete opposite happening. Moreover, the lack of competition in the industry would be bad news for consumers. If anything we should ask for more console makers, to drive down costs and keep manufacturers honest.

Really, the only way to justify Nintendo going third-party is because you simply want Nintendo to fail or submit to Sony, Microsoft, the PC master race, etc. If you really want to play Nintendo games, suck it up and pay $200-$300. If you don't like Nintendo games, who cares what they do? If you like one or two Nintendo franchises, don't wish for Nintendo to exit the hardware business. Those franchises might not survive the transition, or might suffer as a result.