Don't think Nintendo really had much of a choice here. Three factors:
1. Their console division has been beaten badly 3/4 last generations and the last one basically pushed them into full irrelevance in the home console market.
2. Supporting two systems that have "better than basic PS2 graphics" becomes virtually impossible as time goes on. Even Sony or MS IMO would not be able to do it. The resource demands to constantly keep new games coming for two systems like that becomes too high of a burden. We saw that already with Wii U + 3DS. A home system with PS4 graphics and a portable with PS3 graphics is bordering on impossible to manage.
3. They didn't have any kind of new "gimmick" to market/sell a differentiated home console around. They haven't been able to come up with a new Wiimote type gizmo, even the Switch is basically just their older hardware functionality amalgamated into a portable form factor.
A single hybrid device has advantages, but it likely also means they'll never see 250 million type hardware numbers (or close) again. The 3DS has like 5 different model revisions but the sum total of all that is only 66 million after 6+ years, so I don't think just releasing a few revisions on the basis of some size differences (mainly) is going to alone be some magic ticket. You need to have a more major revision in there with more major hardware changes like Apple does.
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