A Wii on par with the PS360 would've also cost $400 at launch and had far more limited appeal at that price point. 

Wii was just a one off miracle fad, it's not a repeatable, reworkable scenario, especially not now that Apple/Google have monopolized casual gaming by effectively offering it for free on devices that are 10x more mainstream than the Wii could ever have dreamed of being. 

GameCube did a lot of things you guys are asking for (roughly equal power, easy enough to port to, basically all the same Western IP third party games). 

Do you play much FPS yourself?

Can I just interject and say that the Fusion is just a bad idea all around? Too many elements pull against each other. In order to be cheap enough to not alienate both the home console and handheld audiences, it would have to be weaker than the PS4 and even then the price can't be but so low; let's ballpark it at $350.

Now, fun fact: no one buys a home console new that is a downgrade from the previous gen. There has never been such a home console that was successful. The Wii was more powerful than the Xbox and the Wii U is more powerful than the PS3. It's hard enough to convince people to pay $300 for something that cuts it close like the Wii U; how are you going to convince them to buy a downgrade for around that much?

But the bigger problem is this: the console at that price and those power stats (console weaker than PS4, handhled weaker than Vita) is going to appeal only to those who are into both sides of Nintendo. Someone just in the market for the handheld is going to be put off hard by the $350 pricetag and the home console being forced on him. The home console fans aren't going to be too happy about paying $350 for an anemic machine. Only those truly into both will want it. And given the sheer size discrepancy between the Wii U and 3DS user bases, clearly those demographics don't overlap all that much.

The fused platform only increases value proposition if you want both; otherwise it's just fluff.

And as for making it easier to support their platform with games, not really. They would be fusing two different demographics and having to appease both. So they still have to make handheld focused games (Pokémon) for that side and console focused games for the other. They would have more software in theory but the same amount in practice (ex: Fusion has 45 games, half home console, half handheld oriented. If you like both, you have 45 games to choose from. If you like only one you have 12 or 13 games to choose from.)

Frankly, it wouldn't help them expand their audience and it would alienate sizable chunks of it. It certainly wouldn't help in the US where the Handheld market size is smaller relative to its population than the home console market by a very large margin.

Anyway, rant over. Carry on. :P

PS:  This is assuming the "handheld and console in one" approach where it is one product, not the idea of two interconnected products.  Anyway, done now.

Pretty much every major genre. 

People just dont understand Nintendo's business strategy. Nintendo creates software, that while on the surface people may ridicule, that ridicule paves the way for them to conrtol it (have a monopoly) if it turns into a hit. The ridicule is a barrier that is set up to prevent others from entering. A perfect example of this is Smash Bros. Instead of making another Virtua Figher or Street Fighter clone, they created a fun quirkly little game that no third party dev would even think of making because it looked "gay".

Now since Smash became a hit, Sony who built their marketing on "mature" tried to copy it with PASBR and it exploded in thier face. So, no one can make a successful Mario Kart or Smash clone. BAM, monoply money printed. If Nintendo went down the "I'm so cool" route with their software, that would be easy to copy, and then thier monoply would be broken quickly. Look at Virtua Fighter, it is essentially dead while VF clones like Dead or Alive are still selling and thriving.

EDIT Splatoon is clearly a continuation of this strategy.

A fusion consoles is so Nintendo won't have to support a handheld and a console at the same time. Now they can make one game and put it on both systems. This could prevent the large software droughts we've been seeing with the WiiU and the 3DS to a lesser extent.

I disagree that it would be that expensive. They will be using mobile components (similar to what's in smartphones/tablets) IMO. 

Those are cheap. Nintendo will probably have two variants ... a handheld tablet like version with a relatively "cheap" screen (probably something 1280x720 multitouch single panel, no 3D to save costs). And then the home version will use the same chip just with more CPU/GPU cores so that it can suitably display the same games at 1080p resolution at home. 

I think in this scenario the handheld variant could be in the $200-$250 range and the home version as cheap as $179.99 to start (ala VitaTV, with no LCD or battery costs, that dramatically brings down the manufacturing cost). 

It won't be as powerful as a PS4, it will more like Wii U level graphics, maybe a tad bit better with modernized DX11 style shader/lighting effects, and the home version being able to run games at 1080P instead of 720P. I think Nintendo will be happy with that level of visual fidelity, games will look quite nice and I don't think Nintendo has any intention of making PS4-sized budget games any time before 2020. Just too expensive in development cost. 

Nintendo is not big enough to support a console with their games alone, whats it gonna be one game every 3 months?  Where is your evidence that third parties want "exorbiant amounts of concessions" for putting their games on Nintendo consoles?

Nintendo hurt their chances with third parties by mostly ignoring them for their own philosophies. Nintendo used to rule over them when they barely had any competition in the 90's and they had no choice but to bend over to Nintendo since they had the mass marketshare. Ubisoft, Epic and EA were all begging console manufacturers to make sure they had 8GB of ram and updated specs so they could run the higher end games they plan on making. Of course Nintendo had their own plans and paid the piper for it. Third parties do not need to answer to anyone. The manufacturers answer to them.

As I said, I was referring only to the "two products in one" approach that is popular to discuss.  But even the one you suggest faces significant issues.  $179.99 will likely still be more expensive than a used PS4 at that point (2017) and still be weaker by a very large margin.  They will have a very hard time bringing in new fans which is what they need. 

And as for a "create one game and put it on both" idea, I get that.  But the handheld and home console demographics are different.  The games popular on one are not necessarily popular on the other.  So it's not like Nintendo fuses their platforms and all their franchises jump in sales and popularity with the demographic that is new to them.  The sales would likely still be relatively the same.  The only difference is that with the "two products in one" approach, the overall isntall base would be far smaller.   The library in numbers would be bigger, but in practicallity about the same as handheld-orriented games would still appeal to that audience and the console orriented games would still appeal to the other.

Frankly, I think sticking out to 2018 and going 6 years with Wii U is best.  At that point, the cost of tech will be far lower and they can develope a console more powerful than the PS4 with relative ease and still launch at a reasonable $300 to $350.  Couple a console like that with a powerful ad campaign and Nintendo could do far better than they did with the Wii U.