OK, they have 3 generation winning consoles so far and 3 non winning. Of the 3 none winning, 2 have made decent profits, and the other will no doubt be a profitable venture bythe end of the gen.

Any evidence to support that? And by evidence I don't mean the graph that combines Gamecube and handheld sales to make things look better for gamecube than they were. 

Because they are a very profitable business, and making video games has to be a lot more rewarding and fun than flipping burgers.

Lol, that is pretty awesome!

by this logic Nintendo should have called it quits on home consoles after GameCube since they had consistently lost market share and each console sold less than the last. in this scenario Nintendo would have never released Wi which made them billions of dollars.

GameCube was not far from breakeven. If they didn't have bet on a great inovation like the Wii, it would be a failure. There's no reason in getting rid of consoles that make profit, but you'll not invest on something you project not to make profit. And honestly, the Wii U will hardly be profitable and the possible sucessor will have much more difficulty. Not only the market is shrinking, but also Nintendo is loosing the little 3rd party support it had.

Spongebob loves what he does, Ninendo loves what they do. Let's just let each of them have their jobs. :)

I think the fusion idea is a good one for the simple reason the Nintendo doesn't have enough games to split between two consoles as long as they have relatively bad 3rd party support. If they focused on one system they could easily pump out 4+ big exclusives a year.

The only problem I have with the hybrid idea is that I doubt they can make a console as strong as current gen while also being portable (For a reasonable price of course). Perhaps in about 2 years the tech will be their but they would still be over a generation behind the PS5 in performance. Then again, maybe that will be enough for them...

This year, big NIntendo exclusives. 

Donkey Kong Country Tropical Freeze

Mario Kart 8

Fatal Frame V (I'm hoping this comes over)

Smash Bros

Hyrule Warriors

Bayonetta 2 (with 1)

Pokemon 

Professor Layton

Ace Attorney (at least on the console side)

Professor Layton vs Ace Attorney 

Mario Golf

Hell, I would argue they are showing the rest of the industry how to properly price DLC passes (20 dollars for a years worth of content for Hyrule Warriors, and 12 for Mario Kart 8). 

I agree the fusion is the best way to go in the next gen. It's not only Nintendo who can split between the two of them. 3rd parties may also be interested, even those who have lost their faith in Wii U.

Regarding your concern, I think the portable one would just need to be a little bit better than the Vita, while the home version could be a slightly behind the PS5. I mean, Nintendo will always be behind of the state of the art, since it's targeting kids. The difference between the home and portable versions of the games would be just in resolution, textures, effects and some features (see for instance Forza Horizon 2 X360 vs Xone).