I kinda think of the Fusion a seperate thing, I think that's more of the 3DS + Wii U successor all in one. 

How about a lower end "budget tablet" in addition to the above:

$139.99 MSRP

5.8-inch 1280x720 LCD (no 3D) single screen multitouch. 

3DS chipset + an extra Snapdragon 800 mobile chip lets say (should be dirt cheap by now) with 512MB of RAM. 

Perhaps "removable" controller wings so you can position the screen horizontally or vertically (DS/3DS legacy mode). 

NES, Super NES, N64, Game Boy/GBA, DS, 3DS back catalog games ($0.99-$19.99). 

NFC chip built in for Amiibo support. 

Runs customized Android OS (like Kindle Fire), has access to Android apps, but only Nintendo approved ones through Nintendo store. Nintendo charges a small "Nintendo tax" on game apps (so they get a cut of the action). So Angry Birds would be $1.50 instead of $0.99 with Nintendo getting a 50 cent cut per download. 

I think this would clean up in the budget tablet marketspace, but I don't think Nintendo is too vehemently against the devaluing of software prices from the $39.99-$59.99 norm to go this route. 

Watching this most recent treehouse is what Nintendo needs to do more of... Anyway.

The 3DS isn't custom, its just underclocked. Its a standard ARM11 MPCore. The WiiU is but, as is becoming rather apparent, I don't see PowerPC lasting unless IBM strikes a great deal with Nintendo or something. They'll likely keep the WiiU chip around in their next console to guarantee the reverse compatability and, by then, the chip production for it will be dirt cheap.

I just don't know how easily they'd gain mind share in the market, kids or otherwise, since the phone/tablet market is more saturated than a sponge in the pacific. And, yes, it would be better than a lone n3DS but its just not the time to introduce it right now. The n3DS is just to hold over the market for a year or two, it would make more sense to launch anything and everything new as one whole big "idea" for the consomer base to know about.

Never said to compete with Apple, just saying that the market is flooded.

The New 3DS announcement could not have come at a stranger time IMO-  they are about to release a potential 3DS system seller with Smaah Bros and are getting close to the holiday sales season but they announce a new version that will surely cause many potential 3DS purchasers to hesitate or put off all together getting a 3DS until the "New 3DS" is available at an unspecified time in the future.....

.....unless they think they have pretty well tapped the existing market and now need to sell multiple 3DS s to its existing ownership base 

Do you think the next platform will have a 3D screen? Many people were expecting Nintendo to cut it, but now we know that the New 3DS will have an improved 3D screen.

I wonder if the Wii U would be in a much better position if it could play 3DS games in HD from launch... Animal Crossing: New Leaf, Pokémon X/Y, The Legend of Zelda: A Link Between Worlds, Luigi's Mansion: Dark Moon, Kid Icarus: Uprising, Bravely Default, Fire Emblem: Awakening and Kirby: Triple Deluxe would sell well and diversify the Wii U library.

This wasn't an issue in the 7th generation because the platforms were very different, as the Wii focused in motion controls, while the DS focused in touch controls. Now the New 3DS is basically a Wii U (same buttons, two analog sticks, touch screen, NFC reader, gyroscope), but with much less power and it doesn't share the same library.

It's mostly for Japan I think (second analog for Monster Hunter + Dragon Quest X), trying to squeeze a million or two extra sales out of that market. 

But yeah, I think a budget Nintendo tablet probably would've been a better idea. 

But both of those are going to be on the current 3DS. And doesn't that already have the circle pad pro compatible with those games?