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This is a cute concept that might have worked at an earlier time, but in an age where phones have taken over as a source of cheap mobile entertainment I just don't see a substantial market for it outside of being a niche novelty like the NES/SNES Mini.

If Nintendo want to maintain an entry level device after Switch 2 comes out, I think their best bet would be keeping a low end Switch 1 model going, maybe a dockable Switch Lite for $150 or so.