I've heard people make the argument that "Nintendo shouldn't make a powerful console to directly compete with Sony and Microsoft, since the N64 and GameCube, both powerful consoles, failed!"
Here's the thing: The N64 and GameCube didn't fail because they were trying to compete against Sony and Microsoft, they failed because Nintendo made stupid decisions with those consoles, like sticking with cartridges and using mini-DVDs. A Nintendo console on par with the PS5 and Xbox Series X would most likely do very well. Imagine a Nintendo console with amazing first party AND third party games, and having Mario and Zelda in 4k and 60 FPS.
Nintendo didn't HAVE to make a console/handheld hybrid. All they had to do was make a console on par with the PS5 and Series X in power, not make a stupid decision with the hardware like they did with the N64 and GameCube, and make it easy to develop for, and that console would get third party support, which means more sales. It's actually really simple to make a console that sells well. If I can figure this out, why can't a multi-billion dollar company like Nintendo?