Series S performance in docked mode isn't the upper limit I guess, but it's closer to the best case scenario. Nintendo could likely still thrive with the docked Switch 2 performing like a PS4 Pro, or even base PS4. The docked Switch is well below an Xbox One and is one of the best-selling game platforms of all-time.
I would love Switch 2 to run on a small SSD like the more expensive models of the Steam Deck, but it's not particularly likely.
Lifetime Sales Predictions
Switch: 161 million (was 73 million, then 96 million, then 113 million, then 125 million, then 144 million, then 151 million, then 156 million)
PS5: 115 million (was 105 million) Xbox Series S/X: 48 million (was 60 million, then 67 million, then 57 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