You do realize that NA has over 3 times the population of Japan, and Europe even more than that. Proportionally, Pokemon still sells far better in Japan.

And it's made in Japan, so will always bend to the Japanese market and tastes. There's no reason to split the development effort.

I thought Nintendo owns Pokemon Company and Creatures Inc outright while Gamefreak co-owns a portion of the Pokemon IP.  Somebody else made a comment that Nintendo also owns a portion of Gamefreak but I haven't had a chance to verify.

One family, one console (at least per brand per generation). But portables, you could have mutiple for children and their child like parents (like me). That's a lot more copies of the game sold, using much less graphic intensive development process, on a platform that is much more likely to induce other kids and friends to buy both hardware and software to join in.

Console Pokemon does run the risk of sabotaging portable business unless it's really really well thought out. It'll be interesting to see how Monster Hunter 3G handles this. It would be a great Pokemon experience if somehow the portable main franchise can utilize the console version for p2p, mmo, near field censor toy figure, etc. Be genius to have both games playable without each other, yet enhances the exp if you got both. Pokemon done right will all but ensure a profitable generation for Nintendo IMHO.

Game Freak is independent, Nintendo sadly does not own them. Nintendo owns 66% of the Pokémon Company (Creatures Inc owns 33% - Nintendo owns them, and Nintendo 33%). Although Nintendo owns a majority of the Pokémon Company, they are independent nonetheless. They do their own thing which in turn lets them release apps on IOS and so forth. However, Nintendo does own the Pokémon IP; as a result, Pokémon games can only appear on Nintendo consoles.

It is arguably their most profitable franchise.

I think it's because Nintendo knows that you need exclusives to sell a system. If people can get their Pokemon fix in HD with awesome graphics on a home console they won't need it in a tiny screen.

It is not that it wouldn't be viable, it is more that it is questionable and adds a lot of potential costs with potentially smaller reward.

Take a look at the Monster Hunter franchise. It was a Capcom attempt at getting into some online experiences similar to Phantasy Star Online via the console market. But the first two titles on the Playstation 2 weren't exactly blockbusters. If switching a PS2 developed game over to the PSP wasn't as easy as it was the series probably would have died on the second game.

But they did move it to the PSP and even with the replacement of online multiplayer for what would seem like inferior local multiplayer the game became a massive success that defines a new subgenre. They have released Monster Hunter games on the Wii, PS3 and Xbox 360 and few reach the success of the portable games, even a port of MH3 matched or topped the world wide total of the original console release within a year of its release. Pokemon going for a full online console route was impossible with the N64, the GC had the Collisieum and XD games that came close to offering a nearly main game type experiences with their single player modes but didn't  do nearly as well as even some of the portable Pokemon spinoffs.

By the time the Wii rolled around the writing was on the wall and despite now currently having the ability and enough experience with online gaming to get a decent MMO or big budget Pokemon game with ploygons out there for a console but it goes against two things, the initial target audience (children) and the costs to maintain it, which Nintendo rarely invests to maintain such.

It's probably because Pokemon games sell more on handhelds than they do on consoles.

Not a pokeball, they want the handhelds to be Pokedex/Gear/Whatever mini devices they use in game for stuff.

It's like Animal Crossing... it does suit better handheld devices for portability.

Cost, making a main Pokemon game for WiiU would take more time and cost a lot more than for the 3DS.