It isn't mind boggling if you look at MS/Sony financial reports.
You'll notice that nobody else wants to compete either. Why isn't Samsung trying to make a high end console? They have the money and resources and technical know how. Why isn't Apple? They seem to want to just keep the iOS store running. Why isn't Google? Why is Amazon making a set top box that runs Android games? How about a dark horse company like 3M or Oracle? All of these companies have the resources to make a home console that is directly in line with PS4/Xbone if that's what they wanted to do. Microsoft pushed its way in 15 years ago, and in the last decade and a half, no one else has made a serious attempt to enter the high end console market. Why is that?
Answer: because it's a terrible business to be in. Nobody wants in. Given that context, it's not surprising that Nintendo is operating this way. Why push hard / spent a ton of money to get yourself back in to a market that isn't very profitable anyway?
because they make premium games and game hardware and nothing else; and their handheld audience is still shrinking; and there is growth to be had in the console space if they can take back some of the retail game buying market.
If they concede the psx1 audience and their handheld market continues to contract, well sux to be them I guess.