I have 3 modern clones: an original Yobo toploader that I bought back in 2005, an FC Mobile II (NES), and a Hyperkin Supaboy (SNES), but I do the majority of my retro gaming on original hardware.
I noticed starting back in 2004 the Yobo NESs were released in the US, then cloned NES/SNES 2-in-1s, and Genesis followed. The NOAC units place the entire NES guts, CPU, GPU, RAM, etc on a single glob-top. Then there's a 5V regulator, crystal, and a few analog components to handle the audio/video circuit. I can tell the SNES clones have multiple chips in them, which is likely why they cost more.
I'm guessing the N64 is next, but the clock speed and RAM are both an order of magnitude larger/faster. The patents should be expired by 2015, so that opens the doors for production.
Do you think the first N64 clone will be discrete hardware based, or software emulation? Obviously hardware would be the better way to go, but it may be cheaper to manufacture with software, and bugs in the emulator could be updated via firmware. The latest ARM processors are fast becoming extremely cheap and powerful, and coupled with a cartridge adapter and controller ports, they could probably handle the load. The designers could easily port over the source code from a popular N64 emu if they decided to go the software route.
No matter if the console sucked for certain games or the real hardware was still cheaper; some people would buy it anyway. It's not a matter of whether it's possible to do, but when.
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~From the Nintendo/Atari addict formerly known as StarDust4Ever...