I think you are looking at this all wrong. I see it as a positive direction for the handheld industry. Nintendo has been trying to make their handhelds adaptable to TV forever now. Super Gameboy, Gamecube Advance (add on you put under the gamecube that allowed you to play GBA games on it)
With the invention of mobile phone games Nintendo's old model was becoming obsolete. Nintendo realized they could no longer separate their handheld and console lines so they merged them. The switch should be marketed as a console experience on a handheld that includes a function to play it on the TV seamlessly. If they market it as a console it has to face off against the PS4 and in that head to head it loses. But market it as a handheld you can use as a console if you wish, and you have a market unique product.
End of 2009 Predictions (Set, January 1st 2009)
Wii- 72 million 3rd Year Peak, better slate of releases
360- 37 million Should trend down slightly after 3rd year peak
PS3- 29 million Sales should pick up next year, 3rd year peak and price cut
