Veteran video game journalist John Davidson is reporting Wednesday that Nintendo is secretly showing select developers a radically new "Wii HD" design behind closed doors.

The "complete refresh" would arrive in 2011, sources said, and would be a true "next generation" Nintendo console. Davidson reports that the new system would be a true successor to the Wii, which launched to critical claim and continued success in November, 2006. Those developers who have seen the system in action have unofficially given it the "Wii HD" moniker, not Nintendo.

The anonymous sources have also described the transition from Wii to Wii HD as "similar to the shift from Game Boy to Game Boy Advance," in that key elements remain intact while the core hardware is made more powerful. Regardless of the final form, sources stated the "Wii" name will remain, in part.

And while sources were hesitant to spill the beans on all features they witnessed the new machine produce, they could confirm HD visuals, increased digitally distributed content, and backwards compatibility. A local storage medium was hinted at, but remains unconfirmed. 2011, coincidentally or not, is also about the time when many analysts predict downloadable movies, games and music will bury the need for physical media formats like Blu-ray.

Nintendo will also continue to focus on how people interact with the system, and not the power or processing under the hood.

Supporting Davidson's sources is evidence that goes beyond the typical "we do not comment on rumours" shtick that Nintendo normally fires off for such stories. And, as it so often is, all you have to do is follow the money.

As Nintendo has grown over the past two years, so too has its research and development budget. Since the launch of the Wii, Nintendo's spending on R&D has ballooned to more than ten times what it was five years ago, during the dying days of the GameCube. In the past three years spending has tripled.

The numbers are pretty telling: In 2003, Nintendo spent US$34 million on R&D. In 2006 the number climbed to $103 million. The following year it rose dramatically to $370 million.

"While this could be attributed to any number of additional projects, the level of spending suggests that a large project is in the works," Davidson said.

No kidding. A new Wii console -- and we mean completely new, given the bump in research and development -- is as sure a thing as giant enemy crabs appearing at a Sony press event.