Nintendo is trying to position Switch to not even compete with the other consoles. Basically Nintendo is trying to attract a mostly less-informed audience, like they did with Wii and tried with Wii U. That audience doesn't realize it could cost much less and even if it does, it might not care about it too much if it still seems reasonable to. That audience just wants the experience, as long as it's reasonably priced in their opinion.
At least that should be Nintendo's intention. Whether it succeeds is a different thing, and it probably depends largely on how well marketing succeeds. Personally I see the product itself as a risk because it might lack the magic Wii had. I think it's a pity, because the product itself is one of the most versatile high-profile gaming products.
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