I think this would be a disaster just from the POV of they either need to pick one side of the road to walk on. Either they are on the budget/lower end side of the road (Fusion platform) or they are on the side of the road with a high tech console (something capable of competing with PS5, not just PS4). 

If they want to walk in the middle of the road (a PS4 knock off, 3-4 years late), they are going to get run over. 

That is basically what the Wii U is ... a "middle of the road" console ... it's better than the PS3/360, but nowhere close to the PS4/X1. But it's not even a budget console either, it's still quite expensive. 

You're going to get run over if you don't give your system a firm, easily marketable identity. 

I still don't see how fusion will translate to home consoles. How will it output to TVs. Will it be 720p60 or 1080p60? 4K is completely out of the question I'm guessing.

The GameCube sold badly mostly because of its kiddie image! The mini-discs didn't help either!

Nintendo Fusion Handheld Chip - 280-300 GFLOPS performance. Runs games at 540p-720p resolution. 

Nintendo Fusion "Console" - Basically the same chip as above, just two or three of them thrown into a small box together with say double the RAM. Runs the same games, but can run them at 1080P with perhaps a few added effects (FSAA) and 60 fps locked. 

That's basically what I think will happen. The "console" will be something the size of an AppleTV and it will just be handheld components. But it you string 2-3 of those chips together, you probably have something reasonably quite powerful. 

If you put three A7 processors (the Apple iPhone 5s/iPad Air chip) in a box together, I'm pretty sure it would be more powerful than a PS3/360. 

The other smart thing about this approach is Nintendo could get a big discount on chip prices by using the same chips for both product lines (bigger orders = lower costs) and they also save the R&D of having to developing two chip architectures. 

I get it, but I don't see 3rd parties embracing that model at all. They'll need to program their games to scale against two performance levels. Add different amounts of memory and processing power and things could get messy. Looking at Smash 3DS and Smash Wii U for example, that seems like too much work.

I disagree, I think Nintendo is the only ones willing to lift a pinky to help their home console. Any and all games from third parties have to be funded by Nintendo to get made.

Also, you're talking about fusion like it's a bad thing, since when is playing a home console game anywhere a bad thing?

Well I think the point of the whole approach is that now Nintendo can focus their entire development teams onto one format. That coupled with some Japanese support should give you a platform that has a constant flow of games with or without Western 3rd parties. Imagine Mario Kart 8, Pokemon X/Y, Mario 3D World, Monster Hunter 4, Dragon Quest VII, Zelda: LBW, Bayonetta 2 on one platform instead of split to two seperate ones. 

I don't think scaling would be that big of an issue, the Wii U and 3DS are dramatically different architectures and the Wii U is far more than 3x more powerful than the 3DS. It's more like 10x+ more powerful with 10x more RAM and a completely different CPU/GPU architecture. 

The Fusion using the exact same chips to a developer would be more akin to a PC developer making that works on say a lower end GPU, but one that's still in the exact same family of products. It would be like supporting a Radeon 7970 and a Radeon 7790 at the same time or something. It's actually probably a good deal easier than the PC developer analogy because PC devs have to support like 5,6,7,8+ different GPU classes sometimes (from both nVidia and AMD, lol). Ditto for smartphone devs that have to make games/apps for 2-3 generations of phones/tablets at a time. This is actually probably a lot easier than that. 

Also the handheld games could render at a lower resolution (540p or 720p) and the console games at full 1080p. So the handheld chip doesn't need to be as powerful. 

Nintendo's support was always a given. Any third party support just isn't. Nintendo is barely lifting a pinky on that part.

Fusion is not bad in my opinion. Nintendo could come up with something awesome. But Nintendo will enbark on a new direction - one that will have little or no return option to the past.

I will very likely buy the Fusion anyway.

I pretty much agree with you, especially the part where MK8/Pokémon/Smash Bros (yep I added a few) should be at launch, with 1 or both of the rest of the 3 being stated for the year later!!!!

To be honest for a Fusion platform I could see Nintendo just talking to maybe three third parties. That's all they'd really need. 

I'd speak with Square-Enix about tailoring the hardware so that perhaps a port of Kingdom Hearts III and Final Fantasy XV might be possible and that Dragon Quest XI is a lock (even if that series goes multiplat). 

I'd speak with Capcom about retaining Monster Hunter exclusivity. 

And y'know I'd probaly talk to EA. Not bend over backwards, but since there is no way right now to play a "real" game of Madden or NHL or FIFA on the go, I'd offer them a deal ... no licensing fees for the first full year. In exchange EA agrees to give Nintendo a version of FIFA, NHL, Madden NFL, Battlefield, Star Wars, and Need For Speed. 

After that I'd talk to no one. 

I'd renew my relationship with Platinum Games for a Bayonetta 3. I'd renew my relationship with Tecmo/Itagaki for Ninja Gaiden 4 exclusive. I'd expand Retro Studios to two teams and let them work on a FPS but push them to make the FPS the most innovative FPS on the market. 

I'd scoop up some indie devs as exclusive makers, like the Trine guys and the Shovel Knight guys. 

You actually don't want too much third party support because you have so many 1st/2nd party software titles that need selling.