Except chips that powerful do exist and have for some time and are already in devices for under $300. The Nvidia Tegra X1 is in their Shield console and sold at a large profit for $200, the Apple A9X which is probably even more powerful is estimated to cost $35 a pop. 

Nintendo doesn't need a fat profit margin on their hardware nor do they need to use a 2K resolution screen or something crazy on their model. It's very feasible.

Beyond that, even at $250 lets say ... what is a better value ... spending $300+$200 on a Wii U + 3DS XL ($500, so cheap right?) or getting a hybrid device that can play ALL the games on the go and on the TV for half the price and perhaps run Android apps and do other things too. 

Spending a bit more on the hardware so that it's powerful enough to be a competent console as well as a portable wouldn't be such a bad play for Nintendo, the value proposition destroys the failed model they're using now. 

Except chips that powerful do exist and have for some time and are already in devices for under $300. The Nvidia Tegra X1 is in their Shield console and sold at a large profit for $200, the Apple A9X which is probably even more powerful is estimated to cost $35 a pop. 

Nintendo doesn't need a fat profit margin on their hardware nor do they need to use a 2K resolution screen or something crazy on their model. It's very feasible.

Beyond that, even at $250 lets say ... what is a better value ... spending $300+$200 on a Wii U + 3DS XL ($500, so cheap right?) or getting a hybrid device that can play ALL the games on the go and on the TV for half the price and perhaps run Android apps and do other things too. 

Spending a bit more on the hardware so that it's powerful enough to be a competent console as well as a portable wouldn't be such a bad play for Nintendo, the value proposition destroys the failed model they're using now. 

NVidia Shield uses the Tegra 4, not the X1, which only has around 1/4th of the GPU power of an X1: https://shield.nvidia.com/store/portable

Also, we don't know if there is a large profit margin (or any profit at all; really - it may as well be sold at loss and recover the costs trough software sales on it). Besides, since NVidia is making their own chips they don't have to buy them from third parties, reducing it's cost naturally. The 35$ cost of the A9X also is just the pure production cost, without any development, shipping and is calculated from a theoretical 100% yield rate, which never occours. You can easely more than double that price if you include all the other costs, too.

High processing power on a mobile device always comes at a cost of battery life. The NVidida Shield does have good battery life and power, but that's due to it's weight of almost 600 gramm, 3x what a traditional handheld console weights (even the 3DS XL models only weight around half as much) to accomodate the necessary batteries. It is thus necessary to strike some balance here, high-end mobile chips just draw too much power. The 8-10Watts of consumption for Tegra K1 and X1 are too high for handhelds unless making something of the size of the 3DS XL the new base model and an even bigger model the mainline version to accomodate for the necessary batteries to keep the handheld running, which would make them rather clunky and heavy.

250$ is a price at which a competent handheld can be produced, but in no way will it be more powerful than a Wii U. Just for camparision, the Snapdragon 820, currently the highest model in the whole line, comes with a Adreno 530 as it's graphics chip. As explained, this chip would already be too powerhungry for a handheld console and certainly also too expensive to meet the projected 250$ pricetag. But while the ARM CPU part of the Snapdragon 820 possibly beats the CPU of the Wii U (only possibly because it's only a dualcore marketed as a quadcore due to ARMs big.LITTLE concept with 2 high-power cores and 2 low consumption cores alternating depending on the running tasks), the Adreno 530 is less powerful than the graphics chip on the Wii U. Sure, it says 588GFlops against the 320GFlops of the Wii U, but those of the Adreno are only in half precision, meaning you need to cut the number at least to half, making less than 300GFlops. Thus, while an ARM based Handheld device could be a sucessor of the 3DS, it would actually be weaker than a Wii U and thus unsuitable to replace that one, too. And while it is very much possible to create more powerful hardware around ARM CPUs, it would make the chips much more expensive and again, more consuming, too much for handheld devices.

@Topic: The "News" ain't news for those who where even just casually watching the market in Japan. Wii U was sold out on Amazon Japan since early January, followed one month later by a huge drop in sales of Wii U consoles simply because it's heavely supply constrained. The situation is already getting much better since then, though it has not yet returned to normal.

And damn, how could we get from that topic to the discussion above?

NVidia Shield uses the Tegra 4, not the X1, which only has around 1/4th of the GPU power of an X1: https://shield.nvidia.com/store/portable

Also, we don't know if there is a large profit margin (or any profit at all; really - it may as well be sold at loss and recover the costs trough software sales on it). Besides, since NVidia is making their own chips they don't have to buy them from third parties, reducing it's cost naturally. The 35$ cost of the A9X also is just the pure production cost, without any development, shipping and is calculated from a theoretical 100% yield rate, which never occours. You can easely more than double that price if you include all the other costs, too.

High processing power on a mobile device always comes at a cost of battery life. The NVidida Shield does have good battery life and power, but that's due to it's weight of almost 600 gramm, 3x what a traditional handheld console weights (even the 3DS XL models only weight around half as much) to accomodate the necessary batteries. It is thus necessary to strike some balance here, high-end mobile chips just draw too much power. The 8-10Watts of consumption for Tegra K1 and X1 are too high for handhelds unless making something of the size of the 3DS XL the new base model and an even bigger model the mainline version to accomodate for the necessary batteries to keep the handheld running, which would make them rather clunky and heavy.

250$ is a price at which a competent handheld can be produced, but in no way will it be more powerful than a Wii U. Just for camparision, the Snapdragon 820, currently the highest model in the whole line, comes with a Adreno 530 as it's graphics chip. As explained, this chip would already be too powerhungry for a handheld console and certainly also too expensive to meet the projected 250$ pricetag. But while the ARM CPU part of the Snapdragon 820 possibly beats the CPU of the Wii U (only possibly because it's only a dualcore marketed as a quadcore due to ARMs big.LITTLE concept with 2 high-power cores and 2 low consumption cores alternating depending on the running tasks), the Adreno 530 is less powerful than the graphics chip on the Wii U. Sure, it says 588GFlops against the 320GFlops of the Wii U, but those of the Adreno are only in half precision, meaning you need to cut the number at least to half, making less than 300GFlops. Thus, while an ARM based Handheld device could be a sucessor of the 3DS, it would actually be weaker than a Wii U and thus unsuitable to replace that one, too. And while it is very much possible to create more powerful hardware around ARM CPUs, it would make the chips much more expensive and again, more consuming, too much for handheld devices.

@Topic: The "News" ain't news for those who where even just casually watching the market in Japan. Wii U was sold out on Amazon Japan since early January, followed one month later by a huge drop in sales of Wii U consoles simply because it's heavely supply constrained. The situation is already getting much better since then, though it has not yet returned to normal.

And damn, how could we get from that topic to the discussion above?

Nvidia Shield was released in July 31, 2013. with price of $199, basically 2.5 years ago, end of 2016 would be 3.5 year after Nvidia Shield, that means that Nintendo at end of 2016 can easily have noticeable stronger hardware for similar price. Also you said Nvidia Shield have GPU around 1/4 X1 power, thats similar power of Wii U GPU power, and Nintendo 3.5 years definitely can have noticeably stronger GPU.

Some of ARM CPU-s are definitely stronger than Wii U CPU. Also you talking like if Nintendo choose ARM CPU they need to use ARM GPU as well, that's not true, AMD can easily make APU that combines ARM CPU and custom AMD GPU.

Be aware that by X1 I meant Tegra X1, not Xbox One. And the Tegra X1, while being more powerful than a Wii U both in CPU and GPU, doesn't nearly do 4 times so, not even double the power of a Wii U (320GFlops for Wii U vs 512GFlops on Tegra X1). So the Tegra 4 definitly doesn't even come close to Wii U in terms of Power.

I agree that some ARM CPUs are stronger than the Wii U CPU. But guess what? None of them has a graphics part that is stronger than the one in the Wii U. That's why I took the Snapdragon 820 to compare with the Wii U Chip - it has the strongest GPU part right now. And since graphics are way more important than CPU power in a gaming console (one can also see this on Xbox ONE and PS4 - their CPUs are puny compared to their GPUs), none of the ARM Chips will suffice to replace a Wii U in terms of Power.

Of course, one could always combine a stronger AMD or NVidia GPU with an ARM CPU for a console. But these graphics parts quickly will outgrow the limitations of an handheld console. Like some pointed out, the Tegra X1 is used in the Shield Android TV. But that one is always connected to a 40W power supply unit and thus has not to worry about draining batteries in an instant. 40W, even as rare peak consumption, is way above what a handheld console can stomach.

You can turn it any way you want, a mobile console, "hybrid" or not, will not suffice to replace the Wii U unless the stationary console part of an hybrid console takes over substantial parts of the calculations. Anything mobile has to make to many compromises and sacrifices to bandwith, battery, price and size to allow them to take over stationary consoles. This may change sometime in the future, but not in the near future.

Better than expected holyday sales which drained the limited stocks and problems with relaunching the production (which also happened too late) after having been shut down 2 years ago.

But again, 3.5 years later handheld device can have much stronger hardware than Nvidia Shield had in 2013.

Also when I said hybrid device I dont think form factor of Vita or 3DS, such a device would definitely be more bigger, form factor similar to Wii U gamepad. IMO at end of 2016. Nintendo can release such a device that have similar or stronger power of Wii U (Wii U even in 2012. had already very old tech).

Of course a handheld device can be stronger nowadays than NVidia Shield did in 2013. The Snapdragon 820 I used in the comparision is the latest in the line and stronger than a Tegra 4. The difference however is not huge because mobile chips hit a wall in the meantime, risking to become too hot and ARM processors in general quickly rising in energy consumption above 2Ghz. Since 16/14nm + FinFet is already in use in mobile chips I doubt we will see a huge jump in the near future, more like incremental updates.

Wouldn't the size of a Wii U Gamepad not be a bit too much for a dedicated handheld gaming device? I'm not sure I would take something as big (and potentially heavy) casually around with me just to play games. Might just be me though, dunno how other people would feel about this

Thats a point, device I talking about wouldn't be only handheld dedicated device, it could be used like home console too, so bigger size for device like that (that can be used like handheld and home console) wouldn't be problem.