According to IGN, the system will use a revamped version of AMD's R700 GPU for a graphics processor. This would put Nintendo's system ahead of the PlayStation 3's NVIDIA 7800GTX-based processor or the Xbox 360's R500-based GPU.
The CPU for Project Cafe - the system's apparent codename - is similar to that of the Xbox 360, based on a triple-core IBM PowerPC chipset, though Nintendo's system will reportedly have faster clock speeds than current hardware. It is also said that the system will output 1080p video with the possibility for stereoscopic 3D functionality, which could be an important feature with rumours of built-in Blu-ray.
In terms of price, IGN's sources predict Project Cafe to sell for between $350 and $400 (about £212 and £242) and could begin shipping as early as October 2011. The system is being manufactured at Foxconn in Taiwan, so the recent disasters in Japan should not impact production.
Though Project Cafe is the system's rumoured codename, it seems Stream is one of many names in the running for its official title. Stream could be a reference to the rumoured ability to stream games onto the system's controller.
The system is rumoured to be approximately the size of the original model Xbox 360, and visually resemble a modern interpretation of the Super Nintendo.
Rumours have suggested that its motion control functionality will be better than the PlayStation Move and that developer Retro Studios is currently working on a game for the system.
Nintendo is to officially reveal its next home console at E3 in June.