There's a few of the rumors that I'm being apprehensive over, as well as common misconconceptions I'll have to dispel:
■The "HD screen controller." I can buy a touchscreen on the controller: the Dreamcast's memory cards had screens visible on the controller themselves, for instance. And the DS/DSi/3DS has shown how well touchscreen technology has matured. However, the "high-definition" part would imply a very high resolution: technically it'd have to be at least 1024x720 to be considered "high definition." For small such screens, the highest DPI to be found is on the iPhone 4, and even THAT only hits 960x640... And that sort of DPI also entails a MASSIVE price: think $100-200US per controller.
■Nintendo never takes a loss on the hardware. After all, taking a loss on hardware is the exception, not the rule: only three consoles did that: the Xbox, Xbox 360, and PS3. The Xbox did so as Microsoft was trying to "buy their way into the market." The 360 was much more of the same, but close enough that the first die shrink saw them start a profit on hardware, even ONCE they slashed prices. (i.e, initial 360s may have been $350 to make, but the first revision cut that to 16MB. But it's been only 3 years since the DSi, which'd imply only a 183% increase, to perhaps 44-48MB. Instead we jumped to 128MB. That's a whopping +700% increase, or well over four times the prior rate. This is good news, since previously low RAM quantities were a perrenial gripe for developers on Nintendo platforms. It's why some Wii-exclusive games like Monster Hunter Tri looked as stunning as PS3 counterparts, but were plagued by load screens every 30 seconds.
If we're getting into speculation here, the following, judging from Nintendo's history of decision-making, and their decisions on the 3DS, is what the Wii's successor would resemble, hardware-wise:
■CPU - 4-8 core @2-4 GHz, based on the PPC 970 design used as the basis for the 360 and PS3's CPUs... Should be fully BC with the PPC 750-based CPU that the Game Cube used. (no one's sure where in that spectrum the Wii lands; it could be a beefed-up 750, a toned-down 970, or anywhere in-between) May more resemble a Cell Broadband engine, if developers see more merit in its hybrid "conventional CPU cores plus stream processors" design that it had. If it does, may have only two cores, plus perhaps 8-16 SPEs. On a 32nm process, CPUs would take up 1/8th the size per transistor that they did on 90nm when the 360, PS3, and Wii released back in 2005/6. Since CPU power isn't all that necessary for graphical visuals on a console, this doesn't need to be worlds above even the PS3 to be dominant. (case-in-point: the Xbox's CPU smashed the PS2's and Game Cubes... But it didn't have much impact on graphics)
■Graphics - Almost certainly from ATi, and more reflecting a modern graphics core. Firmware could ensure backwards compatability for stream processors to handle previous fixed-function units, much like how newer GPUs do the same on PCs. If it follows the super-scalar design of modern ATi units (rather than the vector design of ATi's 360 Xenos, or nVidia's modern GPUs) it'd have 160-320 or so shader cores: given that consoles don't have to try anything past 1920x1080, this would EASILY be enough.
■Memory - The safest bet for Nintendo would be to take around 1024MB (1GB) of GDDR5 memory, replacing the 64MB GDDR3 in the Wii, and keeping the remaining Game Cube memory structure (albeit shifting it to not contain the frame buffer) for backwards-compatability purposes. Moore's Law would suggest 2048MB would be best as a "sweet spot" for a 2012 console, but I honestly don't think Nintendo's changed THAT much, and a 1/2 RAM disparity isn't as critical as the 1/5 one the Wii had, as we saw from the PS2 competing with the Xbox.
■Disc Format - I'd be surprised to see Nintendo adopt Blu-Ray: the advantages of its capacity are moot anyway... PC games don't need 'em, now do they? Console games only needed them because they often have dozens of hours of pre-recorded FMVs... which are all in 720/1080p HD. So the game becomes secondary on the disc, to what is basically mostly an HD movie. I also would be surprised to see Microsoft buckle down and license Blu-Ray: remember that the IP is owned by Sony, their competitor.
■Internal Storage - I honestly wouldn't be sure what Nintendo would do here. They may finally go with a hard drive, but knowing their focus towards cheaper hardware in many places, I'd not expect it to be big. They may decide to still stick with Flash memory, just more of it, such as 8GB: The Wii's design very much spoke that it was designed to fit into the cramped apartments of urbanites in Tokyo, rather than the well-ventilated, spacious entertainment centers of America or Europe.
■Controller - I honestly won't say much here. It could very well skip the touchscreen: after all, almost ALL rumors for the Wii's (then only known under its code-name "Project Revolution") controller all pointed to it being a large touchscreen, thanks to the DS's success. Naturally, as they often have done, (barring the Game Cube) their controller design surprised everyone. For the "Wii 2," I'd say all bets are off here.
[citation][nom]amk09[/nom]I would rather pay $500 for a next-gen console that has substantial hardware upgrades than $300 for one with smaller "incremental" upgrades. IMO it would be beyond stupid for them to release a console that didn't destroy the xbox 360/PS3..[/citation]
You have things backwards: making a pricer console yields the "incremental" upgrades over the competitors: simple time and Moore's Law are what bring you the substantial upgrades. Typically, you can, if you're a system builder, spend perhaps 40% more (such as going from $250->$350US in hardware costs) to get 40% more power... Or you can wait a single year and get it for the same $250US.
[citation][nom]Yuuki[/nom]The only mistake Nintendo has ever made is in the storage department but they are also really conservative when it comes to preventing piracy,[/citation]
You're very right to note that when it comes to many choices, "conservative" has been the word that distinctly marked Nintendo's many business choices, especially when it comes to things that later are seen as bad moves.
However, I'd note that, especially as seen on the N64 but on other consoles, the storage medium wasn't their only bad choice: they've also been not-so-great in terms of their RAM selection, also owing to conservative decision-making. Nintendo's consistently shown a distinct paranoia over the semi-flexible prices of RAM, which, unlike other computer hardware, partly behaves like a commodity; (such as oil) over time, yes, the price comes down, but many of us enthusiasts here will remember a couple years back, when DDR2 and other RAM prices went UP and stayed there for a long time. This goes with Nintendo's insistence to always make a profit on their hardware: they don't want RAM prices to change and make that profit disappear.
As a result, each console has had less RAM than it really needed in order to properly compete: it's actually one of the chief weaknesses of the Wii, either directly or indirectly. (technically, the only thing stopping the Wii from doing a game in 1080p is its fixed 1MB framebuffer, a holdover from the Game Cube. Simply expanding that would've changed everything, and made the Wii a fully HD-capable console)
As I'd noted above, those hoping Nintendo will correct from their mistakes have some good signs in the 3DS: as I noted, it bucked following Moore's Law straight from the DS and DSi, giving us a whole 128MB: while still not at the top of the heap for mobile devices, (high-end smartphones typically have 256MB, and the NGP will likely have that as well) it brings it within the range, instead of sitting distinctly below them... and a smartphone comparison isn't fair anyway, since smartphones must keep their OS up at all times for, say, their phone capabilities, while the 3Ds can dedicate its resources fully to games. (for the same reason, the NGP will seriously crush an Android or iPhone)