While the internal specs for the new Nvidia Shield are impressive, the device faces a significant uphill battle if it wants to be a worthy contender in the handheld market.
The Shield needs to out sell the Vita...while marketing toward the same target audience.
To succeed in a crowded marketplace a device needs to be better than it's competitors. Business common sense. Since the Shield seems to have the same market strategy as the Vita- a portable console experience- we'll say that the Shield needs to meet or exceed the sales of the Vita (but really it needs to exceed) to be successful. And it needs to do so while marketing toward the same target audience with a lesser-known brand.
Nvidia is using the exact same strategy Sony used with the Vita, but somehow expecting a better result.
With, might I add...
Little third-party support and a lack of in-house development studios.
If Sony can't convince third-party developers to make games for the Vita, then Nvidia doesn't have a chance in hell convincing them to make games for their unknown, unproven handheld.
Also Nvidia can't compete with the first-party support enjoyed by Nintendo and Sony, and as such will have to rely on ports- the majority of which will be controller adaptations (if they're lucky) of touch-control games from the Android marketplace.
Nvidia isn't a household name.
To the average consumer Nvidia sounds like a knock-off brand next to established names like Sony and Nintendo. The brand name alone acts as an exclusionary barrier to an audience outside of Nvidia's narrow target for the shield.
Gamers want to stick with brands they know and trust, and to the gaming mass market (non-PC gamers) the name Nvidia doesn't carry much weight. They would rather have a Sony or a Nintendo than an Nvidia.
There's nothing casual about it.
To the casual audience, controllers are intimidating. Casual consumers use smart phones for gaming because their simple touch interface is easy to understand and provides a simple way to communicate game mechanics.
The controller shape and button layout of the Shield will send Joe Casual cowering into a corner. Mass audiences will want nothing to do with the device.
Which is more significant that it initially sounds, because...
The Shield still has to compete with Tablets and Smartphones.
The majority of people, gamers or otherwise, get their mobile gaming fix from smart phones and tablets. The growing Apple and Android marketplaces accommodate gamers of varying tastes, from the casual games like angry birds to full-on Need for Speed titles. Most people, when on their bus commute or killing time in a movie theater, reach for their phone, where they can enjoy a 15 minute experience for less than $5.
To even try and compete with tablets, the Shield will have to offer smaller games near the $5 price point; which sort of defeats the whole reason to use a Shield in the first place. I'm sure Angry Birds looks great running in 720p on a Tegra 4 processor, but it's overkill for the platform and destructively expensive. To the point where there isn't a compelling reason to take your Shield with you when out and about.
Which you might have a tough time doing anyway, since...
It doesn't fit in your damn pocket.
Take a break from reading this post, and go find a 360 controller (PS3 owners try a Dual Shock, though the dimensions aren't as similar). I'm sure you have one lying around somewhere.
Now take the controller, and try to cram it into one of your pant pockets.
Did it work? Good!
Now try walking more than 10 feet.
This device, as exciting as the internal hardware sounds, isn't very portable. To transport the Shield, you need to be carrying a backpack, messenger bag, purse, or fanny pack (if you do try the last one, please take a picture for historical documentation).
This basically limits the use case for the Shield to commuting time, airplane rides, and home use. Though, since the Shield will have a tough time getting worthwhile exclusives, there isn't much of a reason to play it while lounging around at home.
Good luck Nvidia!
You're going to need it. Come back and see me if your hardware survives long enough to see a second and third iteration- then I might reconsider.
And when you reach the bottom of the handheld well, say hello to the Xperia play for me.