Nintendo's move was prompted by increased competition from tablet and smartphone gaming.
Japanese news sources report that Nintendo will rapidly integrate their console and mobile gaming divisions into a single business unit by February 16th. The aim of the merged divisions is, naturally, to develop next generation hardware that according to Nikkei "will turn heads." The new unit will operate out of a $340 million facility to be constructed near Nintendo's Kyoto HQ by the end of 2013. The report intimates that Nintendo is making the move due to increased competition from tablet and smartphone gaming. By uniting the divisions, Nintendo is hoping to improve interoperability of its mobile games and consoles. Having both teams in the same building, under the same management, will also allow them greater latitude to cross-pollinate ideas. The initial united team will consist of 130 console and 150 handheld engineers.
Given the increasing similarity of Nintendo's console to a tablet, and Nintendo's willingness to experiment with new forms of hardware, it will be interesting to see what comes out of more unified mobile and console development at Nintendo. Whether this move was a long time coming, or is a response by Nintendo to the perceived success of the Wii U launch, remains to be seen.