I really think the best thing Nintendo could do at this point is to drop the price of the Switch and sell Switch 2 for 399.99.

This way you have a budget option Lite for $149.99, OG Switch for $249.99, and OLED for $299.99. The do Nintendo selects ranging from $30 to $40 for select titles. Make Switch 1 the budget option now. 

But I doubt Nintendo will do that lol

Selling the Lite for 149$ and cutting the OG even less than that, let's say 229$, discontinuing the OLED and having the Switch 2 at 399$ will really get the Switch 1 to not only 160M but even maybe 170M.

They should absolutely make Switch 1 the budget option. Enough time has passed to where I think Nintendo could feasibly cut the price even more than $50 for each model - Roughly $70 to even $100 and still profit.

The OLED model may not have as much leg room, being the more recent of the three models, releasing in October 2021.

But the base and Lite models? More than enough time has passed to where their production costs should have dropped considerably, and they can still make a decent profit on each system sold even with hefty price cuts.

They could do a lineup of Switch Lite at $129 or even $99; Base Switch at $199, and Switch OLED at $299. They can also finally do the Nintendo Select lineup for Switch 1 games; All in time for Switch 2, which I'd imagine will launch at $399. Or even $349 if we're lucky (At which point, I think they'd start to phase out and eventually discontinue the OLED model because why spend $300 on the OLED model when you can just save up a little more cash and jump straight to Switch 2 for just $50 more?)

So basically: 
Nintendo Switch 1 Lite, $99 or $129; Nintendo Switch 1, $199; Nintendo Switch 1 OLED, $299; Nintendo Switch 2, $349 or $399.

And they run with that lineup for a few years until they eventually come out with a Switch 2 Lite model, which will effectively kill the Switch 1 family altogether. But I'd imagine we won't get that until 2027-2028 - Given Switch 1 plenty of time to enjoy its twilight years and have healthy and respectable end-of-life stage.

I doubt this too, simply because they don't need to go that low. They'll opt for an increase in perceived value which means before too long the Lite and original model cannot be bought standalone anymore and always come with a bundled game at the prices of $199 and $299, respectively. That creates enough of a gap between them and a $399 Switch 2 that has no included game. Not to mention that a PS5 costs even more than that and Xbox... actually, scratch Xbox. By now there's hardly anyone who considers to buy one anyway.

Nintendo Selects are dead because the current strategy for software pricing has proved to be viable. Never drop the MSRP, but have occasional 30-33% off sales on the eShop to address the budget gamers.

What has been true time and time again over the years is that people, including myself, believed that Nintendo needs to drop prices on various SKUs to get to 160m+, but it turned out that it was never necessary. And it will continue to be that way, because in the current climate of the console space Switch is the budget option as is.

A couple other reasons I can see Nintendo not cutting Switch 1 prices is that it makes Switch 2 seem like a better deal. Switch/OLED at $299/$349 makes a $399 Switch 2 look like a no brainer and Lite at $199 is half the price so it still has a home as the budget option.

Also, new hardware is often sold at cost or even at a loss so Nintendo probably wants to keep the Switch 1 line at its current high profit margin to offset any potential losses.

Going forward, we shouldn't be asking "How can Nintendo get to 160m+?", but "How can Nintendo maximize profit?"  That is how Nintendo is going to look at it.  However, it just so happens that the path to maximizing profit should easily push them over 160m+.

Nintendo does not like to put all of their eggs into one basket, especially a console transition.  This is why they said the DS was originally a "third pillar" to the GBA and Gamecube.  It was actually meant to be a replacement to the GBA, but they didn't want to say that, lol.  They absolutely do not want to kill off the Switch quickly.  The Switch is the biggest cash cow that Nintendo has ever had, and their fiscally conservative business side is not going to want to kill it off quickly.

I personally think the smartest move for them at this point is to cut the price for Switch Lite and base model and kill off the OLED model.  They might bundle in a game instead, but I think that is a worse strategy.  All hardware on the market needs to look attractive to some type of customer, so a $149/$249 price for Lite/base model respectively for Switch along with a $349 or $399 price for Switch 2 would make it very clear that one type of system is the old budget model and the Switch 2 is the new premium system.  They can cut the hardware price and still sell it for a profit, and if they don't cut software prices, then they'll make a ton of profit.

Once this next fiscal report is released it should be obvious that the current fiscal year is going to be in the top 10 for Nintendo's history.  It doesn't make sense to go from a such a profitable situation and then try to kill off the Switch 1 as fast as possible, since that is the system that made them so profitable.

I would love Nintendo to do this! Sadly, I think that Nintendo wouldn’t consider this as an option since they have sold the Switch for 8 years now without an official price drop (bundles are a special case exception). I sure hope that they consider this and put it into action. It would help out the market in South America, Mexico, and China.

Everything points to the possibility that Nintendo keeps the current Switch alive for ~2 more years.

Yes this is very true, until March 31, 2027 is when support for the Switch will stop (though I think this only refers to production). They even stated this before. So we should expect the same to be done for the Switch 2, 10 years of production. Meaning on average Switch 2 needs to sell near 17M to reach my very early living prediction of 170M. Given that Nintendo via Bloomberg says that 2025 will sell 20M units this gives good vibes for the consoles future.

I also plan to make a list of all rumored games and the leaked specs so we can get an understanding of what we could be dealing with.

I think they will keep Nintendo Switch online open for longer on Switch than they did with the their online stores and games on older systems. Since they changed the business model to a subscriptions service there will be more of an incentive for them to keep the service up. Many people keep the subscriptions going even if they do not use the service often while buying games in an online store is more of an active choice that declines faster.