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I'm not a Nintendo expert, and I don't know a lot about business. Nintendo certainly can screw plenty of things up. They should stick to the hybrid model of the Switch. Here's what the Switch successor should be like to have a great chance of success based on Nintendo and industry trends.

Needs:
-Backwards compatibility (physical and digital) with most if not virtually every Switch game.
-A good name. Even if you keep Switch in the naming, don't pick a garbage name like Wii U. A successor being called Switch Pro or New Switch would be a bad idea because it would make it seem like a mid-gen refresh. Try names like: Switch 2, Super Switch, Ultra Switch, Flex, Hybrid
-Strong software. Though Switch has had first-party software droughts, there has still been some fantastic software. The third-party is the best on a Nintendo home console in a long time. Nintendo needs to keep that up.
-1080p screen on the handheld
-Controllers that don't drift
-A cleaner, more vibrant eShop
-4K capabilities at least for video streaming, but even for select titles in docked mode. Almost every game should be able to run 1080p60fps in docked mode.
-Mario Kart, Animal Crossing, Zelda, or a 3D Mario at launch
-8 GB RAM and other specs that put it at least at base PS4 performance. Ideally it would be slightly better. PS4 Pro might be possible, though difficult. It's obviously not going to be able to match Xbox One X or Xbox Series S.
Should have
-Virtual Console or something like PS Now/Xbox Game Pass
-Dedicated servers, party chat
-Achievements system
-Themes
-Activity Log like the 3DS



Lifetime Sales Predictions 

Switch: 151 million (was 73, then 96, then 113 million, then 125 million, then 144 million)

PS5: 115 million (was 105 million) Xbox Series S/X: 57 million (was 60 million, then 67 million)

PS4: 120 mil (was 100 then 130 million, then 122 million) Xbox One: 51 mil (was 50 then 55 mil)

3DS: 75.5 mil (was 73, then 77 million)

"Let go your earthly tether, enter the void, empty and become wind." - Guru Laghima