Just to add my two cents into this conversation. 

Q1. The primary sales driver for last fiscal year was definitely Animal Crossing. Q1 for 2017, 2018, and 2019 were around 2M, yet Q1 2020 was over 150% boost to 5.68M. Q2, Q3, and Q4 did not see anywhere near those increases. So, yes those smaller titles are "system sellers", but nothing close to Animal Crossing. In which case, trying to judge Switch's 2021 FY performance from just this quarter is not going to yield an accurate result. Animal Crossing just came at the PERFECT time. The percentage drop is because Q1 2020 was freakishly large, not because Q1 2021 is disappointing.  

Q2. Q2 for Switch in 2020 had a much lower increase than typical from Q1 for two reasons. A) Q1 was freakishly large (as listed above) and B) Q2 production wasn't available because it was an unpredictable spike. Q2 2021 could very well be on par with Q2 2020. Personally I think it might be slightly down due to withholding some production for OLED launch and just some customers waiting for the "better" Switch. 

Q3. Q3 is the biggest determining factor here, and Nintendo is primed for success. Q3 2020 was surprisingly tame compared to what was expected. Now, you are suggesting their were big system sellers last year, but there really weren't for this quarter. The games that were released from Nintendo amount to: Pikmin 3 Deluxe (a port of a less popular franchise), Mario Kart Live Super Circuit (an expensive remote control video game), and Hyrule Warriors Age of Calamity (A Musou type game that probably sold as well as it did due to using the BotW look). Meanwhile, Q3 for Switch has Metroid Dread (a brand new entry in a less popular franchise), Mario Party Superstar (Popular franchise), Wario Ware Get it Together (Not a very popular franchise, but still a unique game), Pokemon Diamond and Pearl (Even the worst selling Pokemon remake is over 12M, this will do 10M+), and Advanced Wars 1+2 Remake (less popular franchise). Add that to the OLED model which will increase sales, even if only for the double dippers, well then you see how Q3 2021 is going to be bigger than Q3 2020 guaranteed.

Q4. The fact that Q4 2021 is launching with a Pokemon game right out the gate means it is probably going to be at least on part with Q4 2020. The only thing I could see is sales being slowed since Pokemon D&P just launched and people are "Pokemon'd out", but that didn't happen with Mario for 3D World, so I don't think it will happen with Arceus Legends. Especially since it's such a radical departure from traditional Pokemon games. Other than that, if Nintendo can somehow get BotW 2 to launch in March of 2022, just in time for Q4, we will probably see a HUGE spike. I don't know if that will happen, but it could. Regardless, this quarter is the biggest unknown, and it's still looking pretty positive. 

Overall, given all this information, the Switch at worst will make Nintendo's sales projections (25.5M), and that's if Q2 is down by a significant amount and Q4 is down by a significant amount. Otherwise, Switch should be on par (plus/minus maybe 3%). This is all coming from a guy who thought Switch sales would drop after 2020, btw. But, based on everything we know, it's probably not going to happen this FY. So, yeah you could be right with your prediction, but I think your prediction is worst case scenario. 

As I believe I said earlier, just because a game came out early in 2020 doesn't mean it doesn't drive hardware sales up in the holidays. A lot of people wait to buy hardware until they are heavily discounted (holidays), but they made the decision to buy the hardware months earlier based on software that was out. It's strategic delayed purchasing to maximize your wallet's capabilities. People aren't just buying hardware in the holidays because of the games that literally just came out. Parents don't buy a console when their kids want it, they buy it when it makes sense for them financially. A lot of adults do the same thing buying it for themselves.

And to the bold point, true, if we were comparing one list of games to the next, this year's lineup looks better. But something that I don't see people mentioning that is worth considering is this: Every year a console is on the market is one more year of people already having purchased the device or one more year of it becoming yesterday's news in the people's eyes. At some point, no matter what software comes out, hardware sales diminish as a device inches closer to its maximum consumer potential. So we can't just compare one software list to another, because you also have to throw in the fact that the Switch is 1 year older now than it was last year, which makes it less appealing to people that either want the newest thing or already own the device. 

Bold: Two things, the Switch wasn't heavily discounted and the holiday season wasn't a major boost in comparison to Q1 or even Q2. Holiday 2020 was very tame compared to what was expected. Also, there is definitely evidence for good holiday releases giving higher holiday boosts. FY 2019 would have actually been lower than FY 2018 (not by a lot, but still) for Switch had Smash not come out when it did. 

As for your second paragraph, while saturation is a thing we can't use that as evidence for or against. It's too hard to determine. I mean, I suppose if this was year 6  or something, but even for the 3DS fiscal year 6 was greater than its fiscal year 5. Things are just too volatile in the video game industry. We are only in year 4 for the Switch anyway. There are many examples for consoles that have done better in year 4 than year 3. I get what you're saying how it isn't a sure bet it'll keep increasing, but that's why we have to look at the software lineup to help us gauge. Another way to do this is to look at the current sales trajectory, but Q1 was such an outlier that it's leading to false conclusions. 

While it is true that every console reaches a saturation point where it won't move alot of hardware anymore, I would like to remark that the Switch as a console is very unusual in the sense that it's a hybrid. Like with the Gameboy back in the day it's not a completely new concept, but for the first time it perfected it.

The true potential of the console isn't a known factor and it can't be compared to a traditional console like the PS4.
Yes, it started dropping, but not because of saturation alone, but because of anticipation of the OLED model and due to not as many people being in lockdown anymore.
That the console will drop harder than any other console ever period in the year where it's most anticipated tiltle will launch in addition to a already known variety of guaranteed multi million sellers, is simply unrealistic and a pipedream.

Are you prepared to be one of those people?

I don't know.  The OLED preorders sold out within minutes, despite the Steam Deck being announced the same day.  But, even if it does no better than the New 3DS line, those systems still added around 15 million units, which was 20% of 3DS' lifetime total.

With an OLED version, Pokemon Gen 4 remake, Pokemon Legends, Splatoon 3, BOTW sequel, Switch (Base, Lite, OLED) price cuts and possibly a Switch Pro release, I don't see how it's possible for the switch to sell less than 135m LT. It will most likely end this year with a ~105m. so 35 mill to end of it's LT will not be a challenge really.

Worst case scenario (2021 start 79.87m):

• 2021: 24-26m (It's already at 9.18m shipment with 2 quarters left)
• 2022: 19-21m (~80% drop) Base and lite pricecut
• 2023: 9-11m  (~50%) Switch sequel releases.
• 2024-LT: 4-5m  (~40%)
• Total: 135-142m

This is incase all said games and price cuts don't help the switch gain sales.

Best case scenario:

• 2021: 25-27m
• 2022: 21-23m (~90%) Base and lite price cut
• 2023: 18-20m (~85%) OLED price cut, Switch Pro release(maybe)
• 2024: 10-12m (~50%) Switch sequel releases.
• 2025-LT: 2-4m (~25%)
• Total: 155-165m

I'll go with 145m atleast just to be safe.

I was speaking broadly about all consoles, and when I say "heavily discounted" I also am including bundles in that. So instead of spending $360 for a console and a game, you spend $300 due to the game being bundled for free. Those kind of deals are very common during holidays and consumers are very aware of it. Holiday 2020 was definetly feeling shortages, in my opinion. Nintendo had no idea the combination of Covid + ACNH would drive demand to the crazy levels it did, and obviously didn't produce enough Switch's that year because of it (plus the chip shortages). I can't blame them, those three factors were unforseeable, but it limited how many Switch's could be sold last year by the end point.

I'd be curious to see a chart showing % drops/increases Y/Y for the average console in modern gaming history to see if year 4, on average, is higher than year 3.

Whatever that means? How many pre-orders were available? 10,000? 100,000? 10,000,000?

Where did you get the New 3ds sales figures, by the way? I'm not doubting them, I would just enjoy seeing those myself. I didn't think we had figures for literally every iteration of 3ds, but I'd be happy to see them! Or did you just calculate how many 3ds were sold after the new lineup came out? If the second option, a lot of standard 3ds' would have also been sold during that period so the 15 million would be divided between all the iterations that were out at that point, but again if you have data breaking down each iteration I'd love to see that.

Tag. This will be another worth coming back thread in a year or so