How many people really need to play freaking Wii Sports on the go? It's one game that can stay at home and even there a handheld can replicate that experience if you have people coming over or something. 

The vast majority of Nintendo franchises that actually matter ... like Mario/Zelda/Metroid/DKC/Star Fox/etc. etc. as Reggie loves to remind us are best played with a physical game pad + buttons. 

Might be true, lol, I do think there are a lot of people this gen already who are saying "I already have Mario 3D Land on my 3DS, I'm not buying a console to play something similar to that."

The problem isn't going to be the hardware, it's the games. The difference between Nintendo console games and Nintendo handheld games doesn't exist just because of hardware limitations, it exists because people usually want and expect different things in a handheld versus console games. The fact that Nintendo gets this is the reason they are still dominant in the traditional handheld game market.

Having said that there are certain genres and types of games that can work equally well on handhelds and consoles and i think this is where Nintendo might be thinking to bring parts of their business closer together. I wonder about the possibility of them working towards producing game engines that easily scale between their home and handheld hardware, something that will be facilitated by the rapid improvements in mobile processing. That way they can release digital titles that can be played on either system. You can opt to play the technically better version of the game on your home console or play the handheld version on the go, with the option of streaming to your TV from your handheld when you are at home.

Ultimately they could do this with most/all their titles, provided the user input is similar enough, and let the consumer decide which games are 'handheld/mobile' and which are better played on the big screen with better hardware.

While i think the days of dedicated consoles are numbered and even though the Wii U isn't doing great, Nintendo will still make money from it and I think voluntarily retiring any profit-making venture and placing all your eggs in one basket is never a wise decision. I think they will try to make money from consoles as long as they can.

just wait for smash bros to release..

Think about this. Nintendo had to cut the 3DS price to $170 for it to sell well. How much will this be? And if you are going to sell it like a 300$ handheld with console like games at launch to justify the price then what image are you creating for the system? A PS Vita from Nintendo?

And remember we are limiting the graphics to be like Wii U or a bit stronger because of its functionality to be handheld and a home console. This means an expensive and quality battery life, good wifi, usb ports hdmi ports, and blutooth for 4 wireless controller. It's going to be difficult to market this.

There is no reason why Xenobalde, X ect. could not be releasd for a Handheld, almost all JRPGs  are on Handhelds nowadays especially since the PSP and Nintendo DS JRPGs just work perfect on this platforms and for Twilight Princess it is the same Ocarina of Time 3D already  exists so what should be different with TP? 3D Zeldas work perfect on Handhels like Ocarina of Time shows.

A home/portable hybrid is coming I think. Nintendo didn't integrate their console/portable divisions into one recently just for sh*ts n' giggles.

I don't think consumers are confused by the Wii U. They just don't want one. I've had people over and played Nintendo Land/NSMBU with them and walked them through the system and they still haven't bought one even though they have a Wii. 

Most people have Wiimotes lying around the house, especially those who would be interested in Wii Sports. Casuals don't seem to have any problem buying a bazillion apps through digital purchase. 

It's an old hat idea that's time has come and gone. 

The 3DS is the first Nintendo handheld that could possibly run a game like Xenoblade and it would probably seriously choke trying to run that game.

The next Nintendo handheld should have the capability to run such a game comfortably though. I think that's a big difference.

I think this is a pretty interesting point. I think it could be possible for the handheld to bump out the console, but only if Nintendo let it, which it won't. Despite the 3DS being able to run a full 3D epic adventure such as Ocarina of Time, the new Zelda is a top-down sequel to Link to the Past. I think they'll follow this formula for a long time, sort of "gimping" their handheld experiences to still be fun, but separate from their console games. (Though I will admit that putting a sequel to a handheld Mario and a sequel to a game that fit great on the 3DS both on the Wii U went against this philosophy. Now they're giving us handheld experiences on their new system, which is confusing.)

When technology got good enough though, I don't even think I'd be against the handheld swallowing up the console. Imagine having a DS with a nice high-res screen and gorgeous graphics that could wirelessly stream to your TV when you weren't playing on the go. It's cheap, it plays all of Nintendo's biggest games, and it's different enough from the competition that it's not really competing, sort of like the Wii. And it's the only Nintendo system you own, playing everything from huge adventures to little distractions. I think that sounds pretty dang neat.