Basically, you got it all wrong.

I kinda think of this way ... stop thinking of the console/handheld as the sun/center of the universe.

Think of the Nintendo Network (from Nintendo + DeNA) as the new sun.

Everything orbits around that, and all your Nintendo hardware for the next 10+ years with operate around that.

Hardware refreshes will happen more often, but it will feel seamless for the consumer just like you don't ever feel like you're starting from ground zero when you buy a new iPhone or iPad from an existing iPhone/iPad. Or say if you upgrade your PC ... your STEAM service is still there, so it feels like a seamless transition.

Expandable console IMO is a realistic option today if the console is based on mobile parts, you could stack 2-3 of them together and still have a very small form factor + electrical consumption.

First gen mobile portable with a 720p screen, second gen with a 1080p screen and so on .... yeah I can see that too.

All sharing the same games more or less but the user can upgrade at their own pace.

The fact of the matter is the old rules of how the console cycle works don't benefit Nintendo any longer. Why keep playing the same game that you keep losing at? Change the rules, there's no rule that says consoles/handhelds made in 2016/2017 must adhere to the same basic concept of a console made in 1983/1985. In fact it's fairly backwards when you think about that the game business more or less still operates under the same principals the NES did. 

Ignore the tech, the important part I'm asking about is the general concept, is it feasible for Nintendo to abandon the typical 5-6 year generations we have come to know and instead offer up incremental upgrades every 2-3 years?

I think hardware will not be an important part in the Nintendo's future. Maybe they will develop an OS like iOS or Android were they will upload games. Some can be played on your portable (smarthphone) or others on your console (tablet). Some even on both, and of course, they will look better on your console.

Agreed, this is exactly why iPhone, iPad, androidPhone and androidTab sales never went anywhere, consumer confidence was so crushed by the frequent updates, that no one bought those ever again. So says our supreme leader!

Not the same market.  Seriously, when did people forget that - to quote the part I bolded and underlined and italicized for ya - expectations of one market are not the same as the other.  Consumer expectations are different in each market.  Gaming devices have different core functions that motivate purchase. 

Nintendo always come with unique ideas, you know ?

So don't get into any PS4/Xbone/PC hardware you think Nintendo progressing

The truth is no one's really tried an alternative model though. Gaming as a business is still in a lot of ways (at least on the console side) stuck in 1983 with the Famicom/NES. 

It's 2015 now. Maybe a new setup is warranted and old ideas should be challenged. 

Why not? It's not any of the "10 Holy Commandments" of Console gaming are serving Nintendo at all anymore .... they only serve to benefit Sony and MS at this point who have basically taken over the entire console market. 

I like the idea of taking away the focus on the hardware so much. Let the network be the focus (like iOS, like STEAM), and give the consumer freedom to purchase different form factors that fit their needs and tastes, a "one size fits all" console/handheld doesn't have to be the way for everyone. 

Yes game developers may have to adjust to scalable hardware, but as long as the configurations are kept relatively to a management number, it should be fine. PC devs (which is most/many PS4/XB1 devs) are used to working on software that must work on like 50 different configs. For Nintendo they will get used to it just fine too, especially when they don't have to make redundant versions of games (ie: 3D Land for portable, 3D World for console, Smash for 3DS, Smash for Wii U, etc.). 

You imply this would solve Nintendo's primary problems and that the expectations built up over the years are teh cause of their problems.  I would say that notion is false.  And I don't care what their next home console is or what business model they use, if they repeat their mistakes with marketing, image, and brand management, it will fail.  Just like the Wii U and just like the GameCube.  That's their primary weakness and until they fix that they will always - always - fail.  If you don't market, you don't succeed.  It is that simple. 

Also, 3D Land and 3D World are perfect examples of how handheld and console games are not interchangeable; they are drastically different games with different concessions made in dificulty, length, pace, and level design to work with their platforms.  In the case of such games, to satisfy all involved parties, they will still have to dedicate resources to two distinct versions or even just two different games.  But another point is that the development issues would alreadly be highly aleviated if the two games used the same engine, which I do think they will have in place. 

And decades of consumer expectations are not going to change with one platform, especially if MS and Sony don't make the jump.  And given Sony's current financial health, I highly doubt they will take the risk.  Because if this model were to fail, it would be a very, very constly mistake.  So if Nintendo starts this new model to challenge the old and Sony decides to stick to the old, Nintendo is a sitting duck for all kinds of criticism as well as counter-marketing from Sony.  Sony stuck it to MS when they tried their DRM stuff, how much more willing will they be to stick it to Nintendo who is trying to force in a new business model they are not at all comfortable with? 

Actually I think 3D World would work great on a portable. 

Just like Mario 64, Zelda: OoT, Zelda: MM and apparently Xenoblade work great on a portable too even though they were never designed to be played on a portable initially. 

A good game is a good game, as long as a handheld has an instant sleep mode, the consumer is smart enough to be able to shut off the system at a snap of a finger if they need to. 

In terms of business model I say just make it a non-factor. You want a really higher end console. Fine, make the base unit of the home version upgradable easily (let people stack them). Mobile processors really work well functioning in unison if Nintendo is using a mobile processor they could scale it up and down very easily. 

Nintendo's job isn't to compete with Sony anymore, because they can't really. No one wants three "Sonys" on the market, there's already two. The fact of the matter is the whole "lets compete with Sony!" ship sailed the moment Nintendo allowed Microsoft to come into the business and gain a foothold. Once that happened the "Sony competitor" slot was filled. 

I think Nintendo's role now will simply be to be an alternative to other platforms which are inundated with hyper violent games and make profit. I can't believe it, but I actually sorta agree with RolStoppable on something (sorta).