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I don't trust them to put their 100% into it, as such it would be easy pickings for Nintendo to beat up on.

Not only that but I don't think Nintendo would allow them the luxury of having a tech advantage, they'd just make a new Switch with a better Nvidia Tegra processor, so Sony would have little/no advantage anywhere. Anything they can get, Nintendo can get from Nvidia or better. 

There's only room for one handheld line in the market now and Nintendo won't give up any sales from it either because they need every single one.