I don't think it would have beat out the PS4 if it launched at the same time, because the hardware either wouldn't be powerful enough or the system would be too expensive.
As for next gen, I don't think the graphical gap is going to matter all that much. The gap is already pretty drastic between the PS4 Pro/One X and the Switch. If someone isn't impressed enough with that gap to not get a Switch, I don't think it's going to matter.
And if you look at the games that are selling, the top 20 or so are Nintendo games. Those games still won't be available on the competition. Since devs will probably want to support the PS4 and One a little longer, and ports of those games are mostly possible, third party support won't completely dry up.
Nintendo also will likely develop another SKU, possibly with more power. And there is still some wiggle room on price to go, and at least one system selling franchise still to launch on the Switch in Animal Crossing.
The next gen systems will of course hurt sales somewhat, because people will always want the shiny new toy. But sales should be more than enough for Nintendo to hold on another 2 years, make a ton of money, and hold them over till 2022-23 when they launch their next big thing.
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