playstation has nothing on lockdown. no brand does.

PS1 & PS2 each had over 80% marketshare in Europe, PS4 is on track to as well.

The only time PS didn't dominate is when they launched a $600 console and Nintendo made a console unlike any other. If PS3 launched at $400 and Nintendo made a PS3/360 imitation console (like Shadow1980 is suggesting) than it would have dominated as well.

PS1+PS2+PS3>NES+Genesis+SNES+Saturn+N64+DC+GC+XB+Wii+360

Imaginable, but still not practical. They wouldn't need uber powerful hardware to upscale 720p handheld games to 1080p (both should be a standard 60fps as they both pretty much are this gen), even if the handheld version of games are Wii U quality. I just don't see it. 

I see a huge jump power wise in their handheld console, and their  typical jump in home console hardware.

Nobody has the U.S. market on lockdown. American gamers have switched brands more than any other. Considering that Nintendo is still a household name in America, if their next console was well-marketed and was a match for the PS5 in terms of power and third-party support, they could easily take first place and sell at least 30 million units. And considering that Xbox gets the majority of its sales from the U.S., if Nintendo takes a plurality of the core gamer market it could drive Xbox to a distant third (assuming there's a fourth Xbox).

Sony doesn't have Japan on lockdown, either. If Nintendo had all the popular Japanese third-party games, it could compete strongly with PlayStation and even beat it, and I think a conventional Nintendo system could sell at least 10 million units in the region.

Finally, while PlayStation will probably still win Europe, Sony is not totally untouchable as we saw last generation with the PS3 selling 40% fewer units than the PS2 to date. It is possible to reduce their marketshare, and I think a powerful Nintendo system could manage a strong second-place finish in the region (say, 15-20M), especially with Xbox declining sharply on the Continent.

PlayStation was a brand that initially succeeded on capitalizing on the mistakes Nintendo made, namely sticking with cartridges for the N64, and still succeeds because of strong third-party support. Xbox is in turn a brand that got huge when it capitalized on mistakes Sony made but stalled when the deck wasn't stacked in their favor. Meanwhile, Nintendo got big in the first place on their own merits, revitalizing a market that was written off as dead 30 years ago. They have the brand recognition, they have strong first-party games, they could play the nostaligia card to the fullest if they wanted, and if they put their minds to it they can run some of the slickest ad campaigns there is ("Now You're Playing With Power," "Play It Loud," "Change the System," "Get N or Get Out," "Wii Would Like to Play"). But their biggest problem since the latter half of the 90s has been weak third-party support, resulting first from using formats third parties didn't want and then making systems too weak for third parties to really bother with beyond a token effort (mostly shovelware and casual/party games for the Wii, and mostly ports of seventh-gen games and the occasional cross-gen game for the Wii U). The Wii was a fluke and there's no guarantee that Nintendo can replicate that kind of success with yet another gimmick-based system.

Third party games are very important. They're what made PlayStation big in the first place. They're bigger now more than ever, and while exclusives are still important they're dwarfed in quantitity and often in popularity by major third-party titles. And third parties will develop for as many systems as they can, so long as those systems are sufficient to their development needs, and that means sufficient power to run all their biggest and best games. Underpowered gimmick-based systems are not a reliable means of garnering success. They can either boom like the Wii or go bust like the Wii U. Meanwhile, a Nintendo system with strong third-party support should be able to stand toe-to-toe with the competition, selling to others beyond core Nintendo fans. It might not reach the heights of the Wii, but it would retain healthier sales over a longer period of time instead of stalling rapidly like the Wii did. Overall, I think a conventional, powerful Nintendo console with strong third-party support could sell at minimum at least 50 million units and could sell as many as 70 million, which is pretty damn good either way.

I am glad to know you have intimate access to Sony's financial records :)

They lost money on the PS3 but nobody knows how much.

Uh, no, that's not what I was trying to get at at all. Nintendo didn't make any big mistakes in the 16-bit era. The SNES launched at a competitive price, had a games library every bit as strong as the NES's, and was strongly marketed. They still lost market share, at least in the U.S. (in Japan the SNES sold about as well as the NES while the Genesis sold poorly). Sega proved to be stiff competition and the 16-bit wars in the U.S. was the closest race between any two consoles ever. The Genesis had a reasonable price, a good games library, and was well-marketed, and that's why it did well.

The beginning of each generation is effectively a reset button. Gaining or losing market share isn't always about making mistakes or capitalizing on the mistakes of others, though it does happen. A system's success depends on pricing, games, and marketing, not on waiting for the other guy to screw up. Two systems with identical pricing and comparable libraries should have very similar sales, as we saw in the 16-bit era. However, a system that outclasses the competition in terms of overall games library should, assuming it is sold at a reasonable price, completely dominate, as we saw with the NES and PS2. And on one occassion we got a system that succeeded despite a weaker library than the competition because it had a much lower price tag, it was well-marketed, and it had a gimmick that clicked with gamers everywhere (and attracted a periphery demographic), and despite the weaker library it had the games it needed to sell it on its other points. But it did succeed on its own merits, not because the competition screwed up.

The U.S. in particular has no collective brand loyalty. Neither does Japan, though they do reject Xbox because it's not a Japanese system (they also largely rejected Sega for reasons that aren't clear). Europe does have a strong pro-PlayStation bent, though. There is no reason to think that the console market will stay the course assuming Sony doesn't screw something up big.

Nintendo did make mistakes with the SNES in the US tho. They gave Sega a full 2 year headstart, which allowed them enough time to release a killer app (Sonic) before SNES even launched. Sega was also trying to slander Nintendo by calling them kiddy, which Nintendo basically admitted by censoring Mortal Kombat.

The reason why Playstation was able to dominate in the US was solely due to Sega & Nintendo making large mistakes. Sega pretty much did everything wrong in the mid-90s, expensive unsupported addons for Genesis. Expensive, difficult to program console in Saturn. Nintendo went with cartridges instead of CDs. Basically Nintendo & Sega handed the market to Playstation.

PS2 continued that dominance by not making any large mistakes but with PS3 they released a $600 machine and pretty much handed over a massive chunk of their PS2 fanbase to Xbox and Wii.

Playstation has been able to reclaim much of that market due to Xbox making similar mistakes this generation like DRM, always online, Kinect required, $100 more expensive. Microsoft has fixed literally all of those problems but the damage was done and PS4 is still leading comfortably in the US.

So yes, the only time large amounts of people have jumped ship to another brand in the US is when their previous brand of choice fucked up. If Nintendo makes a $400 console that is basically Nintendo's version of PS5/XB4, they will get squashed unless one or both of them make huge mistakes. People don't jump ship unless they have a compelling reason to do so.