You are right and you are wrong.
Your points are valid. In the AAA 3rd party market, the switch will never make it very far, especially with the next PS/X coming out in a couple of years. Aslong as Nintendo have an underpowered system, AAA third party support will always be weak.
But, what the switch can have is the japanese portable third party market. With the Vita done, japanese developers have to either go for the switch or completely go home console on the PS4.
So, i think anyone buying a switch has to understand it's a Nintendo system and it's not gonna offer anything different from the Wii U with a pinch of 3DS.
Now, it is also a fact that it's selling well. That is still a bit of a mistery. Who is buying it, if it's not a competent home console? I can only think it's the same people that bought a 3DS. It's a decently big enough crowd to support the system, but is that a sucess? Cause at that point we are comparing Wii U+3DS to switch. Is the switch truly a sucess when seen from that angle? Will it be able to grow that market? I have my doubts, but we'll see.
Hmm, I actually think every successful console taps into multiple markets of gamers. Switch has the potential to tap into a few. But I don't know if Nintendo will do so. Also in the public image the Switch might look outdated as soon as PS5 and Scarlett release. That might cut the lifetime of Switch short. So I'm currently quite sure Switch will go past 50M devices, but still in the unclear if it goes on to 100M. We'll see.