Mostly agreed. Nintendo could keep Switch going to like 2026 or so if they wanted to. But I suspect they will sort of cut it off, not in 2023 obviously, but perhaps launch Switch 2 in holiday 2024. I'm thinking Nintendo might not even bother ever discounted the Switch and Switch Lite. Didn't they not really ever even drop the Wii U's price despite the terrible sales, or maybe dropped it $50? Nintendo doesn't seem to like to make business moves to sell more units, they just like to keep prices high and let everyone buy at those prices then move on to the next system.
Switch OLED will allow them to discontinue the original model and drop OLED to $300 eventually and keep that price for a good long while. They COULD drop the prices of the systems in 2024 and 2025 and 2026 and keep the thing selling and maybe even launch that rumored but false 4k upgrade model to also keep a higher price point in there and keep excitement for the Switch going well in to the middle of the decade. But I see them not bothering much in the way of price cuts on anything and just allowing the market to saturate at the initial launch prices and readying Switch 2 by end of 2024. That way they have a new system on the market just after Switch sales start dropping below 20mil a year (I figure Switch will drop under 20mil in 2024, with or without a successor launch. Could happen in 2023 but Switch might be just over 20mil in '23) so that they don't have any low hardware years since they don't have a second system to back things up.
Nintendo will most likely bundle in games first before they do any price drops. But they have a lot of time left to first do bundles and then do price drops.
Usually, video game hardware does not generate much profit. However, the Switch is different. It was already sold at a slight profit at launch, and it's been on the market at full price for so long, that it has to be making them a lot of profit per sale. They can actually do bundles in 2022-2023, and then start with price drops in 2023-2024 and still make a ton of profit. I think it is unlikely for them to leave this much money on the table. One big difference between Nintendo and Sony is that Nintendo has a lot of evergreens. Every Switch sold is going to lead to quite a few evergreen sales. Playstation games end up discounted at Gamestop (and similar stores) pretty quickly, so Sony doesn't necessarily see a cheaper piece of hardware turn into a lot of software revenue at the tail end of a system's life. Nintendo evergreens keep selling though. So, a $50-$100 price drop in 2024 is going to generate a lot more profits for the Switch both in hardware and in software.
Overall, I still can't say when the Switch successor will release. I think it is too early to tell. I know Switch is going to sell well in 2022, but what about 2023? If it has a big drop in 2023, then I think Switch 2 will get a 2024 release. On the other hand, I think it is more likely that Switch will still sell 20m+ in 2023 given how much room Nintendo has for bundles and price cuts. If it does that, then I think Switch 2 will release in 2025 or later.
Nintendo's business side is very conservative, and they are down to one main system now. Given how much money the Switch is making them, I just can't see Nintendo being eager to kill off the goose that is laying the golden eggs.