Looking at the specifications of the switch and at the current state of the console market Nintendo can not, and isn't planning to compete with Microsoft or Sony for customers who are specifcially interested in home consoles. Not only does the Switch lack graphical capabilities, and certain third party hardware but it is also more expensive then it's console competitors. It's main selling point for people who aren't Nintendo fans or who are particular fans of a certain series , is the console's portability feature. In other words if someone is interested to play the likes of Fifa, Skyrim, Mario or other games on the go, then they may be interested in the switch.
Even for consumers who didn't get a Wii-U and who will mostly use it as a home console, again the selling point is the fact that it is portable. The Switch will be competing for consumers who are interested in portable gaming, while offering large screen capabilities and the gaming library that comes with it.
The release of the Switch follows the premise, as it is coming out relatively early for a "next gen" system, giving it time to transition it's image into the one of a portable console by the time Sony and Microsoft come out with new systems. For the next 2-3 years the Switch will start out by being a competitor of the ps4 and xb1, while slowly shifting both it's marketing and a part of it's game library to the portable gaming market.
The Switch allows Nintendo to be part of the console market for a couple of years, while being an innovative new handheld system that also offers a gaming expereince never seen by that market.
Their is the possibility that different versions of the switch get released along with it's 1st pricecut, some versions will have more graphical capabilities for an extra cost, while newer cheaper releases can add battery life.
The Switch solves Nintendo's issues in both the console and portable market, all while allowing it to compete in both. But overall it is a portable console rather then a home console, due to it's main selling point and to how it will be marketed further along in it's life cylce.