The mistake you're making is assuming that people must choose between the Switch and other consoles. Many people buy the Switch *in addition* to another platform, whether that is PS, Xbox, or PC. There is relatively little reason to buy both a PS and Xbox because there is so much overlap between them in game libraries and system capabilities. But Nintendo appeals to the same market in a different way. Their system is portable, but easily upscales to a TV when at home and they offer high-profile games that are exclusive to their system, ie all their first-party titles. They don't have to stop people from buying another console, just convince them that the Switch is also worth owning because it is fun and unique.

Sales of the PS4, Xbox One, and any possible successors don't matter when predicting success for the Switch because Nintendo operates within their own niche instead of directly competing.

The real reason is why they can coexist despite the 13+ million sales in 2017 and the 20 million so far. 

It's not irrelevant that when Switch came out 80+ million PS4 and XB1s had been sold, as it is not irrelevant that in this specific case, Switch came out 3 years after both consoles were out and next gen was still 2-3 years away. 

No. It's a home console with a portable aspect.
Pretty much everything about it spells home console. It just has the portable side to it. 

That's why not even Nintendo sees it as a competitor to 3DS.

How do you want to make a fair comparison if you don't wait for the results on Switch?

I wouldn't call it niches, but ok.
When they go after the sames market (age demographics, markets), then they are competing. The difference is that Switch was released at a time where it hadn't to compete directly and the real competitors were 2-3 years away.

That direct competition will only come when PS4 and XB1 users have to determine if PS5/XB2 are indeed their main console or not. So far, the signs are that Switch isn't more than a complement, because well, people don't have to choose between Switch and something. There's just no other something.

The first thing that Sony and MS need to do to attack Switch is presenting new platforms.
Then, when people will have to choose between Switch and more, is where we will see how they can coexist and for how long.

I'ts not a question of "must", it's a question of "why didn't Switch, despite all efforts, turn things in it's favor?"; "Why, for example, in the US, instead of having only 30% of it's users be newcomers, didn't it have 70% of newcomers?".
And the answer to that question is what shows if Switch's success is long term and if it will spill over to next gen.

"They don't have to stop people from buying another console, just convince them that the Switch is also worth owning because it is fun and unique."
And that's exactly what is happening: old users of PS4 and XB1 are buying it.

When you are appealing to the same userbase, it's expectable to see a success the size of Switch to make a dent on the competition. Yet, it didn't. 
Reasonable explanation: people aren't really opting for Switch, they are buying a Switch because they already own a PS4 or XB1. Which means, that, for the future, there's the high possibility that when they have to actually choose between Switch, PS5 and XB2, Switch will not be a priority - as it already isn't now.

It's hard to determine how strong are Switch's strengths when it has no direct competition.
Living off of the competitor's market and building one for yourself mean different things.

If this was the case of another Wii, then yeah, they could coexist without any real problems. But this is not the case.

What else could they do to make a handheld? Handhelds are defined by their portable aspect. Based on sales, it certainly seems like consumers see it as a handheld. The fair comparisons come from past comparisons, not from the Switch IMO

You talk as though Switch rocked up when PS4/Xbone were on their last legs, but that's not the case; its first year and a half is overlapping with the peak years of PS4/Xbone. If it could hold its own against one of the most successful platforms in history at the height of its power, it's not going to be any problem for it when PS5/Nextbox turn up.

To return to the Savanna, if a bigger species of Lion turned up in the ecosystem, it would not unduly affect the vultures, because they would carry on doing their own thing, filling a different ecological role, and not directly competing.

LOL, name me a home console that can be play anywhere on the go like on the plane or playing while walking in the park? What home console can do that?

There's no desktop computer that is portable. If it's a desktop computer, it's a computer for the desktop. If a computer is portable, it's firstly portable, even though you can use a portable computer on you desk, like a laptop. Laptops aren't called hybrid, they're portable and you can use on it on your desk too. They're also not as powerful as a desktop computer.

NSW is portable, it's a handheld that turns out you can plug it to your TV with it's own clever setup. A home console that is also portable is like a desktop computer that is also portable. There's no such thing or at least it's not defined this way. Like a laptop, NSW is not as powerful as a home console as home consoles have always been known.

NSW is as hybrid as Zelda Breath of the Wild is open air. Both adjectives are sort of nonsense.

'When they have to actually choose between Switch, PS5 and XB2, Switch will not be a priority'

This is what puzzles me. Why do you assume consumers must choose between them? People are already fine with buying both systems. Why do you assume that fact will change because a new gen of PS/Xbox systems?

And just to add something else to the discussion the paired buying is primarily in NA/Europe. In Japan the Switch has been dominating the PS4 in sales since the shortage was solved. It has 70% of the PS4's sales (4.9 vs 7.0 million) despite a *much* shorter life (1.5 vs 4.5 years).

If that's what you understood, then i'm sorry.
What i tried to say was this: Switch succeed because the market, which was already in the 80+ million consoles sold, had had enough time to be satisfied and didn't see next gen PS or XB consoles in the near future to be excited for (mindshare) and/or save Money for. And as Switch presented itself as a very reasonable purchase, that satisfied market bought it.
And that's why PS4 and XB1 could afford hitting it's peak and staying pretty much flat, respectively, in 2017.

We are not talking about a small existing market before Switch arrived, nor are we talking about average sales for Switch, btw.
To me, the conditions were perfect for Switch to succeed: same users, 80+ million consoles sold already, attractive concept and killer titles and no new competition in sight.
Also, there's a difference when your sales bring the competition's sales down and when they don't. The context needs to be taken into account.

From what i have been Reading, XB1 is now having it's best year.

As i said before, releasing when you already have the above conditions and releasing when you have to directly fight off other consoles, makes up for a completely different outcome. Even if for the simplest reason of them all: people aren't made of money nor do they have an infinite amount of time.

Switch has a portable aspect to it. Does that mean it's a portable or perceived as such?
By that logic, if i say a plane has wings and flies, should people take birds as planes or correctly perceived them as such? I don't think so.

Nintendo's marketing efforts since the beginning, best sellers, most anticipated titles, more than show that this is not a handheld with TV mode, but a home console with portability.

Heck, even Nintendo doesn't see them as directly competing. For good reason.

Why is that thinking so strange to you?
Do people have unlimited financial resources or an infinite amount of time to spend on gaming?
People have to make choices. And they do that based on priorities.

What do you think is the most likely scenario (in 2017), people spending 300$ on a PS4, more on PSN and game(s) + 300$ Switch + game(s), OR those people who already bought 80+ million consoles, buying a Switch in higher numbers than newer PS4/XB1 users?
Personally, the most reasonable choice is the latter.
Those 70% kinda hint at the console being adopted by an old PS4/XB1 user , as the contrary would mean that there are a lot of people out there  with a huge financial freedom, to, in a year where PS4 even went up, to spend an additional 350$ (at least, on day 1). It would also mean that a vast number of old users , who happen to be same userbase, ignored everything Switch related.

I know that Japan is another story. But i don't really think it really changes things.

'Unlimited financial resources'?

Neither system is *that* expensive, but thank you for explaining why you made that flawed assumption. You're assuming that not only are people unable/unwilling to buy two systems, but that everyone is an early adopter. Many people wait for a console to gain a significant game library and drop in price. That's why consoles tend to peak in sales 2+ years after release. Switch will be at that point when PS5/Xbox 2 release at full price making it a great buy for those waiting for the new consoles. PS/Xbox owners who are early adopters have likely already picked up the Switch because if they are early adopters, they will have bought it early in its life cycle.

The country with the second largest video game market doesn't change things? That seems like a deliberate choice to ignore things that don't fit your opinion. If the Switch does as well as the 3DS (and it's outpacing it in a launch comparison) that 23 million in Japan alone.

When PS5/Nextbox arrive though, they'll likely still be offering a totally different value proposition to the Switch, so just as it is now with PS4/Xbone, consumers won't be choosing between one or the other, they'll get both if they're interested in both, as evidenced by that recent survey showing 70% of Switch owners in the US had a PS4/Xbone.

Switch will not be directly fighting PS5/Nextbox because they'll be totally different products that consumers will buy for totally different reasons, just like microwaves don't compete directly with refrigerators and family cars don't compete directly with racing cars.