Mine was quite expensive, I bought a Huawei Mate 9 Pro at launch, but both Huawei and other manufacturers now sport at least 64GB of storage in their models that fall into the same price range as a Switch. Even phones with 128GB of storage can be found at around 50$ above the Switch price.

Digital is growing, especially for consoles, its been huge among PC gamers for years already (which you know, of course, since you game on PC quite a bit). As such, Nintendo need to adapt to the market, if adapting to the market in this case simply means adding more storage; then just do it. If the gain is better support and more software sales, it's easily worth it. Their failure to approach tech and engineering solutions that the market craves or even demands has been their achilles heel since the N64 days. The old argument that one can simply purchase storage one self doesn't really help, like I've mentioned, I find it unfair to expect the consumer to pay for basic functionality that should come out of the box in a modern gaming console, especially when they charge so much for controllers and peripherals as is (my Pro controller cost around 100$ and the base unit itself cost 400$). Even a pair of Joy-con's cost around 100$ here. Not to mention the fact that both Sony and MS offer SKU's of their consoles at the same price as a Switch that houses a 1TB drive.

In the golden age of digital media, skimping on storage space is simply a bad choice. They were forced to cut away the basic SKU of the Wii U as well after a short while, due to the limitations in its storage capacity and the severe limitations this put on the machine itself. If consumers and developers want a slightly more streamlined experience, this is hardly an outrageous wish.

I do agree that they should probably introduce a model with higher storage capacity (I mostly think having an SKU like this would be better for less tech savy people that want more storage out of the box). With that being said though, I am on my 7th smartphone right now and I mostly just purchase the smallest storage capacity SKU available (typically 32 GB-64 GB on most of the more premium smartphones today) and expand it with an SD card; this is because I have found I can get a bigger SD card for the same price or sometimes even lower than having to pay for larger storage SKU for a phone. 

In your comment you mentioned that Switch should have at least 64 GB because most smartphones offer that storage at the Switch's and those there are ones that offer 128 GB at $50 higher prices. Having done some brief research on the internet, I have not found a single phone that has a 64 GB option at $300 or 128 GB option for $350. In a market filled with smartphones, I do not doubt that you will inevitably find a phone at that price and with the storage options you mentioned but you have to take into consideration that those are low spec phones (heck all of the phones I could find at 32 GB at $300, which is the Switch's price, were all using chips that were considerably weaker than the chip inside the Switch) that are much less powerful than the switch. If Nintendo wanted to offer a 64 GB or 128 GB option at the same price as the current Switch then other things would have to be sacrificed on the system to make it happen. Of course, there will come a time when mass production of 64 GB and even 128 GB chips will reduce cost to the point where it is feasible to put in a $300 device like Switch (I suspect that will happen sooner rather than later for the 64 GB variant) but judging by the $300 smartphones I have seen now is still not the time.

I don't think expecting Switch to have the same storage capacity as PS4 and Xbox One is reasonable, considering those systems have mechanical hard drives which are cheaper whereas Switch has to rely on more expensive flash storage. Putting, even a smaller 1.8" hard drive, would increase the size, weight, speed (hard drives for portable systems have mechanisms that stop the drive from spinning upon detecting motion to prevent damage to the drive; this mechanism works but it makes the unit slower), exhibit higher power consumption, and finally it is far less durable. For a device that meant to be moved around a lot, having a mechanical hard drive is simply not practical. In addition, it is also important to mention that all PS4 and Xbox One games have mandatory game installs with their physical copies; while there are a number of physical Switch games where you need to install half of the content on the system, most games right now do not require that and you can run the games right off of the cartridge.

It is the same issue with the cartridges. Yes they are more expensive than a similar sized blu-ray disk, but you don't really have any other options if you want physical media on the Switch.

The reality is that Nintendo can only use what is on the market in their products. Unfortunately, we are at the point where flash storage is still more costly than hard drives (you get less space per dollar), and a similar case can be made with flash ROM cartridges compared to blu-ray disks. However, with Switch being a portable, I cannot see Nintendo being able to fit a Blu-ray drive or a mechanical hard drive in the device without making huge compromises to the portability.

Portability. I sometime double dip if I like the game.

I do agree that they should probably introduce a model with higher storage capacity (I mostly think having an SKU like this would be better for less tech savy people that want more storage out of the box). With that being said though, I am on my 7th smartphone right now and I mostly just purchase the smallest storage capacity SKU available (typically 32 GB-64 GB on most of the more premium smartphones today) and expand it with an SD card; this is because I have found I can get a bigger SD card for the same price or sometimes even lower than having to pay for larger storage SKU for a phone. 

In your comment you mentioned that Switch should have at least 64 GB because most smartphones offer that storage at the Switch's and those there are ones that offer 128 GB at $50 higher prices. Having done some brief research on the internet, I have not found a single phone that has a 64 GB option at $300 or 128 GB option for $350. In a market filled with smartphones, I do not doubt that you will inevitably find a phone at that price and with the storage options you mentioned but you have to take into consideration that those are low spec phones (heck all of the phones I could find at 32 GB at $300, which is the Switch's price, were all using chips that were considerably weaker than the chip inside the Switch) that are much less powerful than the switch. If Nintendo wanted to offer a 64 GB or 128 GB option at the same price as the current Switch then other things would have to be sacrificed on the system to make it happen. Of course, there will come a time when mass production of 64 GB and even 128 GB chips will reduce cost to the point where it is feasible to put in a $300 device like Switch (I suspect that will happen sooner rather than later for the 64 GB variant) but judging by the $300 smartphones I have seen now is still not the time.

I don't think expecting Switch to have the same storage capacity as PS4 and Xbox One is reasonable, considering those systems have mechanical hard drives which are cheaper whereas Switch has to rely on more expensive flash storage. Putting, even a smaller 1.8" hard drive, would increase the size, weight, speed (hard drives for portable systems have mechanisms that stop the drive from spinning upon detecting motion to prevent damage to the drive; this mechanism works but it makes the unit slower), exhibit higher power consumption, and finally it is far less durable. For a device that meant to be moved around a lot, having a mechanical hard drive is simply not practical. In addition, it is also important to mention that all PS4 and Xbox One games have mandatory game installs with their physical copies; while there are a number of physical Switch games where you need to install half of the content on the system, most games right now do not require that and you can run the games right off of the cartridge.

It is the same issue with the cartridges. Yes they are more expensive than a similar sized blu-ray disk, but you don't really have any other options if you want physical media on the Switch.

The reality is that Nintendo can only use what is on the market in their products. Unfortunately, we are at the point where flash storage is still more costly than hard drives (you get less space per dollar), and a similar case can be made with flash ROM cartridges compared to blu-ray disks. However, with Switch being a portable, I cannot see Nintendo being able to fit a Blu-ray drive or a mechanical hard drive in the device without making huge compromises to the portability.