That plan will not work, 3rd parties will not port their AAA games to a single sku that has a fraction of the install base of the overall platform. Games will either run on all skus or none.

Nintendo doesn't have a choice. Its either that or release a Home Console and just allow the Switch to be their handheld. Unless they are going to give up on the idea of being a valid Hybrid. More than likely I think Nintendo is looking at ways to make a Pro Version affordable so that almost everyone will upgrade. Whether that means an SCD or Cloud Gaming, or just a tablet replacement sold separate without Controllers and a Dock. I don't know what they are going to do, but your view is that they will forego that and just basically become a relatively powerful Handheld. If they do that they will fail.

2017, the year Switch, Mario and Zelda launched was PS4's best year.
Eating into Sony's market share in Japan? Any new system released will 'eat into' another systems market share. The question is if it's taking away sales from the other systems in any significant way.
And 2017 was, again, PS4's best year in Japan. http://www.pushsquare.com/news/2018/03/ps4_quietly_enjoyed_its_best_year_in_japan_since_launch

It has since then continued to sell at an expected pace.
Switch is simply doing a lot better in Japan, but does not seem to affect the PS4 in any significant way.

Those are not unusual declines for systems entering their 6th year on the market. Some consoles don't even survive their 4th birthday, let alone sell 18M+.

Nintendo consoles do not sell because of AAA 3rd party games, name me one Nintendo system where they made a difference. They are a nice bonus but nothing more.

That plan will not work, 3rd parties will not port their AAA games to a single sku that has a fraction of the install base of the overall platform. Games will either run on all skus or none.

Nintendo doesn't have a choice. Its either that or release a Home Console and just allow the Switch to be their handheld. Unless they are going to give up on the idea of being a valid Hybrid. More than likely I think Nintendo is looking at ways to make a Pro Version affordable so that almost everyone will upgrade. Whether that means an SCD or Cloud Gaming, or just a tablet replacement sold separate without Controllers and a Dock. I don't know what they are going to do, but your view is that they will forego that and just basically become a relatively powerful Handheld. If they do that they wont maintain sales momentum.

So you don't think having a valid third Console on the market has anything to do with the decline. You think if Switch wasn't available that PS4 and Xbox One sales wouldn't be higher? Now I never said that PS4 or Xbox One are doing bad. I said they are declining and there is no doubt it has to do with Switch. But you expect to see that impact immediately on Launch? I say you will see it more in 2019 and 2020 then of course next gen is coming and we will see what happens there. That one is tough to predict. Switch hasn't even hit its stride yet and its likely to be the top selling console Globally for 2018 and definitely for 2019. Which is quite a difference from Sony #1 and Microsoft #2 for the last 6 years. 

Well that is the thing you are expecting that Nintendo is doing the same as the past. They have already shown interest in having more Third Party support for the Switch. Because everyone knows your game library is what drives system sales, and system sales drives game library. You are also assuming that Microsoft wont have a Handheld with Cloud Gaming as one of the (4) New Systems they are working on. Maybe you are right we will see within the next few years. I do think Nintendo sees value in Third Party support. I do expect they will have a system that is handheld only for Indies and people who are only interested in Switch as a handheld. I also expect a more powerful device. I do think they are also looking at what will split the install base the least, but still keep them competitive. 

You said that PS5 and XB2 are in 'big trouble'. For such a strong statement, you'd expect we'd see some notable effect already on PS4 and XBO.
I used the term 'significant' when talking about the sales decline. If Switch wasn't around I'm sure PS4 and XBO would have sold a bit better, but not in a significant way. Just like Switch would have sold a bit better without the PS4 and XBO on the market. But again, not in a significant way.

What do I base that on? Well for starters, not only did PS4 have its record calendar year in 2017, but few consoles ever manage to sell as much as 20m in a year.
It's unrealistic to think it would have sold significantly more, based on nothing.

What would the 2017 chart be on, according to you, if Switch didn't launch that year? And how does that difference amount to 'big trouble'?

And I'm not exactly sure exactly how much PS4 has sold this year so far, but it looks set to meet the 18m fiscal year prediction, or around there. Meaning even in Switch's second year on the market, PS4 looks to sell similarly to their second best year.

I don't see this disastrous omen for PS5 that you spoke of.
You said there is 'no doubt' that this modest decline in 2018, for consoles in their sixth year on the market (most people consider 5 years the average lifetime of a console), has to do with Switch.
And I'd like to know how you reached that conclusion? How is what they're selling this year so dramatically different from how previous console generations did during their fifth year that you'd declare disaster for their next gen consoles?

Have you considered that the market for PS4/XBO and the market for Switch might just be very different? Not only is there the portability aspect of Switch, but it's a system that is constantly excluded from many of the biggest game releases. If you want to play games like Resident Evil 2, Devil May Cry V, Kingdom Hearts 3, etc, you'll probably need a PS4/XBO/PC.

And the problem of making these games work on Switch will just get amplified when PS5/XB2 come out, because those games will get even more demanding than today's games.
If it takes Square Enix 3 years to port Dragon Quest XI to Switch, imagine Final Fantasy 16.

There is absolutely nothing on the horizon that will allow the NS be on par with the PS4/XB1. And thats even lookin at just processors. It gets a lt worse when we start talkin about game sizes, bandwidth and RAM..... 

Nintendo knows this.

Cloud gamin isnt even remotely possible cause for that to work nintendo will have to partner with someone. Their best bet is with nvidia ad get access to games via cloud streaming but the bad thing with that is that nintendo will not get a dime from such a partnership.

Now to think of something that will even compete with the PS5/XB4 is just beyond crazy. Nt even possible from what would be next gen switch based hardware so say tegra X3. That won't even be able to do it and that doesnt even exist yet. Hell nintendo didnt even use tegra X2 which is marginally more powerful than the X1 they used. 

Nintendo has pretty much always lived and died by their first party "nintendo" games. And I dont see that changing anytime soon. Nintendo competes by remaining unique and being the only hybrid console and the only way to get nintendo games. If thats not enough then they are doomed. But as it stands it seems to be enough.