Anyone that thinks that Nintendo will merge their handheld and home consoles is crazy. In theory it sounds like a decent enough idea, but in practice it is a terrible idea.
Firstly let's just look at the Wii U. Currently selling for around $300, people are frequently bashing its inferior graphics and talking about how next-gen is going to spank them. Maybe if you removed the gamepad it could be around $200, but how much do you think it would cost for them to put the same/similar tech in a handheld device? If the next Nintendo 'console' in 3-4 years is a handheld that you plug into your TV and is not a graphical improvement over the Wii U (or even a downgrade), that will be a massive failure. Sure it will be more flexible, but that will just be another one of the classic Nintendo 'trade-offs' that will feel more like handcuffs.
Secondly, why would any company want less diversity? Although the Wii U has done terribly, Nintendo typically has a decent portion of the home console market, and they already have a stranglehold on the handheld. If you merge those two markets into one it results in almost nothing good for them as a company. Maybe consumers win, but Nintendo gets:
a) Cannibalization of their own products. Instead of consumers purchasing both a home and handheld unit, people need to only purchase 1. Dev costs may be reduced, but so are total sales. And fewer pieces of software are moved since portable and home software are one.
b) No diversity. They now have a nerfed home console in order to give it the ability to be portable. Now imagine that the surge in cell-phone/mobile gaming continues and gains a large portion of Nintendo's handheld market share. Then you are left with a console that nobody cares about for its portability, but is criticized for being an underpowered home console. Instead of 2 lines of products (one struggling, one improving), Nintendo only has 1 line which is struggling.
I don't mind the idea of Nintendo creating a docking station of sorts for their handhelds, but I do not see that replacing their home-console division entirely. It's just not a smart move.
Additionally, those that say Nintendo will leave the hardware business entirely are crazy too. Nintendo is not Sega. They are not leveraged to their ears and on the brink of collapse. They have something like $12 billion cash on hand sitting in reserves just waiting. Even if their market share is reduced to like 30 million consoles per life cycle, they will continue making them just the same. To put things in perspective, I found each companies profit year-by-year since 1981:
Nintendo is not in trouble at all, but they definitely need to do something to change things up in the future. I completely and utterly disagree that a handheld/home console mixture is the solution. Maybe Nintendo needs better computer-engineers to help unify the digital markets of both the Wii U and 3DS (cross compatibility of VC games)? Maybe Nintendo needs to better utilized the online social environment? Maybe Nintendo needs to completely embrace the past, and include ports on their console for all of their old controllers (SNES, N64, etc)? Maybe Nintendo needs to stop reinventing the wheel and realize that they already invented it long ago and just need to refine it? Who knows what they need, but whatever it is, it will be with their handheld + home console divisions remaining seperate.