I thought Tegra 4 or something in that rage, was a MUST for OUYA. But they didn't listen, either because it was impossible to make the switch at that point, or they couldn't get a good Tegra 4 deal, or they just didn't think it was that important. But I hope they at least expected that this is going to hurt them at least a bit, and they might need a change of strategy.
I think OUYA could still succeed if instead of targeting it against Nvidia's Shield, and towards more "hardcore" gamers, they target it more as sort of a "toy", like something they could sell at Toy R Us on the cheap, and for sub 12-14 year old kids. Another strategy is of course promoting it heavily as a cheap media device, kind of like an Apple TV or Roku alternative.
There's still a way for them out of this, if they do it right, but personally I'm still disappointed it's not coming out with a Tegra 4 chip or something cutting edge like that. Hopefully OUYA 2.0, if launched in 2014, will have Tegra 5 or some other cutting edge 64 bit SoC with support for OpenGL ES 3.0 and OpenCL. This is the sort of stuff that gets "gamers" excited, and they've kind of ignored that. But again, it might not be a huge problem for them, if they refocus on a slightly different market.
And I agree that OUYA, Shield and other such devices will basically help each other, and Android gaming in general.
The nice thing about OUYA is that they aren't bound to the traditional console pricing nonsense - launch a loss-leader, then sell crummy old hardware for a decade to make a profit. They can iterate every year and make some profit both from the hardware and the app store.
That being said, I think you're making too many assumptions before it exists. Hardware is expensive, I have no idea how much profit they make per device, or if all the seed money from kickstarter is completely gone. But I know that their future depends on several things. Aside from future sales being a must. In order to iterate, they need to get a lot right -- now. I don't think Ouya is that much more free than any other piece of hardware. They will not be able to iterate that fast, fix bugs that fast, push updates that fast, or sell consoles every year, easily. There's always hope that a random assortmant of people will hack it to the point it's constantly relevant, or that the games that end up getting launched on their marketplace all hit a home run. But it's completely unclear to me at this point. In the age of crowd-funding, a funny thing happens. Backers are already invested in products before they are even created. Speaking much further than just monetarily. There's a fake sense of success and security even knowing that projects can and will fail. Ouya's massive funding only proved the idea, not the implementation.
That being said, when it's finally here, it still has to get people excited. People will still have to want it when it arrives, and when they plug it in, it still has to essentially be awesome. Right now, its too much speculation, if you pick up the real thing and say -- hey, aside from the shit controller, and the lack of power, i still love it. Than, that will mean something significant. As it stands now, Ouya is kind of floating aimlessly in the market, they got too big too fast, haven't really carved out a dedicated chunk of the market. And is already falling far behind as far as the technology used. It falls between a media device and a toy, but in kind of a bad way. If I wanted a media device, i'd buy a roku or build one. If I wanted an android based gaming system in 2013, as of right now, i'd probably end up with a shield. I think that says something. I think the ouya will be a nice little device for sometime, but i'm having a lot of doubts about it's future and it's ability to grow in the competitive and expensive space they opted to jump into.
Ouya, on launch day, will not be able to handle the newest games on the android market. That is a significant issue, one crowd-funded projects are going to have to solve or abandon in the next few years.