So Nintendo (120 million switch units sold) should change their strategy to match steam (2 million sold)?  

I'm old enough to remember the PSP, because of its specifications, was going to doom Nintendo...  the Vita was impressive hardware, how did that go for Sony?

Most people do not care about specs, full stop.

The examples you used with the Switch Lite/Oled and Xbox Series X are not good examples that people wanna pay more for higher specs. Both the oled and Series X are more successful because of reasons outside of specs, the Oled is more successful because people want to have a Switch that actually plays games on the go and TV, nothing to do with specs. The Series X is more successful than the S because it has a disc drive which is something that gamers still prefer to have to this day, again the higher specs have very little to do with it.

You also claim that the most powerful system hasn't won because of problems that don't have much to do with specs, while that's partially true for certain consoles, there are powerful consoles that screwed up because a company was too ambitious with the specs that made the system overpriced, take a look at the Saturn and PS3, both overly ambitious when it comes to specs that people don't care much about which led to an unappealing price. Also, part of the reason why the DS was more successful than the PSP was because it was cheaper, same reason why the Wii was so successful against the competition, because people would rather pay less just to play the games.

A better comparison you could've used to see if people would rather pay more for higher specs is looking at the PS4 Pro and Xbox One X sales numbers against the regular Xbox One and PS4, both the regular consoles and upgrades have the exact same features, only difference is that the PS4 pro and One X have better specs and are more expensive.

1. If it's the case that people would rather spend more for higher specs, then why didn't the One X and PS4 pro outsell the original consoles? Answer is that people don't care to spend a bit more just for higher specs and would rather just get the cheaper model that just plays the same games.

XBox One X was outselling the base XBox One for a while I believe. 

Yes the Saturn happened ... 27 years ago now. I think we can stop referencing products from a quarter century ago now, it's really not relevant. Even PS3 was ages ago at this rate, the industry has matured considerably since then as is plainly obvious the PS5 is having no problems selling through the roof at a high price point. 

The base Switch (non-OLED model) still exists too, but people are opting to pay more for the OLED model. 

We see this trend repeated in multple other products too ... Apple has offered cheaper/budget/smaller iPhone models but the highest end models and most expensive ones remain the best sellers. 

Consumer mentality has changed. People don't want to short change themselves, they want to feel a sense of luxury from the products they buy, because they don't get much of that in other areas of their life. Getting a high end electronics device is a way for a lot of people to get a temporary high. 

YOLO (you only live once) is the mentality rife with the current generation of consumer IMO. The 90s/2000s was a different time, a lot of the household buying decisions were made by people who grew up in a completely different time with a different mind set. Today the people who grew up with a PS2 or N64 or whatever are the head's of the family and their mentality is completely different from their parents when they were growing up. 

The attitude now is if you're going to spend on something ... you might as well go all the way and get the "good" version instead of cheaping out. You only live once, you don't want to look like the loser that bought the cheap model, etc. etc. etc. plays into it. Nintendo is proof positive of it, with the Switch they've made virtually no concession to the budget only crowd. Only the Switch Lite and they won't budge on giving the Switch Lite a dock for TV play (gotta pay the full $300-$350 if you want that even with a 6 year old system), no real price cuts, not even aggressive software bundling either. No price cuts on software. Currently test driving $69.99 for Zelda: TotK. Online? You gotta pay monthly for that now. It ain't 1999 or even 2006 anymore, Nintendo operates drastically differently today. 

Switch 2 is going to be $399.99 minimum. 

Nintendo's European R&D division is already posting job listings hiring positions for Nintendo's "next-generation" console, so I don't think it's that far off.

Features and specs are both important, and both translate to a cost increase. You're not getting more features/specs free of charge. I never claimed the OLED/Standard Switch outsold the Lite due to the specs difference primarily.

Series S isn't being crushed "because it doesn't have a disk drive", that's a silly and convenient excuse. PS5DE -which also doesn't have a disk drive- outranks the standard PS5 whenever available despite 1) the relatively modest $100 price difference, 2) Sony's fanbase being more physical biased than Microsoft's, 3) not being pushed as Sony's main console (It's in high demand because the specs are the same as the standard model). A Series S with disk drive at $350 would barely have any effect on sales performance. A widely available Digital Edition Series X at $399 would have a significantly bigger impact. The Xbox ecosystem is more digital-centric than Playstation's. If the solution was as simple as making a disk edition Series S, Microsoft would have done it a year ago.

PS4 Pro and Xbox ONE X were expensive for what they are, late, were never going to have a single exclusive, and didn't really offer notably better graphics. Their higher specs were mainly used to increase resolution for the limited 4KTV market. For those reasons (Combined. Not individually), they never had the sales potential of a true next gen console. It seems you arrived at the same conclusion that Phil Spencer and Microsoft did when they launched the Series S, seemingly thinking midgen upgrade trends would carry over to a true next gen console ("PS4 and X1 sold better than PS4P and X1X, therefore specs don't matter for non-enthusiasts!"). Midgen upgrades and nextgen consoles are two entirely different things.

I don't see the standard/expensive Switch 2 launching lower than $399.

I think gaming forums can be an echo chamber and lead to misconceptions. The average gamer has no idea what DSSL, 120 hz, 60 fps, etc mean. As long as games look good, nice selection of software and reasonable hardware price.... it will sell.

Why does Nintendo suddenly need to raise the cost of their next system when it was already proven that the 300$ price point was more than successful for them? Why take that unnecessary risk to raise the consoles price to 400$? Maybe if there were a cheaper 300$ model it would make sense, but having a minimum price point of 400$ for a Switch 2 is unnecessarily risky for little to no reason.

Specs really don't matter much to the regular consumer. People in these gaming forums and the gaming enthusiasts always tend to overestimate the importance of specs like crazy, as if the average consumer actually cares enough that Mario Odyssey is running at 900p to affect their purchase, or that the average consumer actually cares that COD or other major current gen 3rd party multiplats aren't on Switch. A vast majority of the average consumers don't care that the Switch is underpowered and that its missing out of these major multiplats, at least they don't care enough for stuff like that to affect their purchasing decisions, and the sales numbers for the Switch right now prove it where it could become the greatest selling console in history despite being underpowered and missing multiplats.

Nintendo shouldn't risk raising the price just to improve on things that didn't affect the appeal of the Switch in the first place, such as it being underpowered and missing on 3rd party support. 4 out of 5 of Nintendo's Underpowered and non-multiplat systems were wildly successful, big part of that was that those systems were cheap and people didn't care about how underpowered it was.

Again, I showed many examples where price affected the consoles appeal more than specs. One big example I could give that pertains to Nintendo is that the 3DS didn't start selling well until it got that huge price cut early on from 250$ to 170$

It's fine for Nintendo to maybe have an optional,  more expensive model at 400$ for Switch 2 and have a cheaper model for 300$, but a minimum price of 400$ for Switch 2 would be unnecessarily risky.

I acknowledge that the Oled is currently outselling the regular Switch, but its over a much smaller sample size in comparison to the total number of Switch owners there are out there and many of those sales are repurchases, it isnt representative enough of the entirety of the Switch's userbase to assume that they all want the more expensive model.

I don't think Nintendo is going to take your advice on any of this, I don't see Switch 2 being less than $399.99. 

The Switch OLED is $350 today, you're not getting an entirely new generation upgrade for that same price, no way. 

The 2000s are over man. Time to just get used to the era of budget priced Nintendo hardware and software (for that matter) is basically over. They just have too much of their fanbase is over the age of 16 at least these days, that means they have more disposable income than little kids do. 

3DS' problem wasn't the price, it was that that hardware wasn't good enough to justify the price. Which runs counter to your arguements, because clearly people were willing to pay $300 for Switch .... but not $250 for a 3DS .... because no one wants a rinky dink little PSP type device in 2011 for $250 ... it was underwhelming hardware and they also made the dumb mistake of thinking Nintendogs could still be a system seller but that's another can of worms I guess. 

But that shows ... yes it does matter what your hardware is. Switch was impressive tech for a portable circa 2017 even being able to run console type games like BOTW, which was well beyond what a Vita could do or the standard iPhone game, it was top of the line for a portable machine. 3DS' graphics capabilities for 2011 were mediocre (a bit better than a PSP) relying more on the gimmicky 3D screen idea. Hardware does matter you can't just fart out any kind of cheap POS hardware and think people are going to be impressed. 

Every Nintendo portable generation leap has been large too ... Game Boy/GBC (NES tier graphics), Game Boy Advance (SNES tier graphics), DS (Playstation 1 tier graphics), 3DS (PS2 tier graphics, maybe a bit lower), Switch (better than Wii U performance, able to handle some PS4/XB1 ports even) .... Switch 2 being better than PS4 performance, able to handle some PS5/XB Series games stands to reason as a logic base point. There's also DLSS to consider which can help a Switch 2 punch above its weight also, a Switch 2 with DLSS trying to port a PS5 may well prove to be easier than the Switch having to handle PS4 ports like Witcher 3 and DOOM Eternal. 

Bold 1: That's the point. Clearly a power advantage is not enough to make up for whatever other disadvantages that a system has. This is consistent across almost every single generation. In addition, there are several disadvantages that popular consoles had, yet they still ended up being the best selling console. For example, the SNES launched two years after the Genesis/Mega Drive (and was not more powerful in every metric). The PS2 launched a year and a half after the Dreamcast. The Wii launched a year after the 360. The PS4 launched a year after the Wii U. The Switch launched almost FOUR years after the PS4 (and is still notably weaker). 

Bold 2: Past trends are absolutely relevant as predictors of future trends. You shouldn't look at things in a vacuum. 

Bold 3: No it doesn't, it lacks a disc drive. More to the point, the disc version of the PS5 is also outselling the discless version because, again, it's feature complete. Comparing the Series S to the PS5 is more apples to oranges anyway. You should be comparing the Series X to the PS5, but you're not because this doesn't help your point. 

Bold 4: They do come at added cost, but not necessarily better hardware. What's in the Switch Lite is the exact same as what's in the OLED. The differences are: Screen size, screen type, ability to dock, and removable controllers. That's pretty much it. Same with PS5 vs. PS5 Discless, same exact hardware minus the disc drive.

Bold 5: While I don't doubt this, I don't think that Nintendo would be successful selling a system for $499 like their contemporaries. Unless the console had very similar third party support and was feature complete. Even then, the past has shown us that three manufacturers competing in the exact same market doesn't bode well (Sega). 

1. Power and "high" price are not inherently bad or good decisions, the system you listed losing had nothing to do with being more powerful. When all other aspects are equalized, specs/features are an important advantage. If more power comes at the cost of late arrival and/or "too" high a price point, then yes, it may not be worth it. I hope you're not mistaking my argument to mean specs are more important than games, or brand power, or timing. Playstation and Nintendo primarily dominate due to their strong libraries and brand recognition. As long as they don't make serious blunders, their hardware are gonna sell well.

2. Distant past trends don't matter nearly as much as more recent trends which had PS4 and PS5 dominating Wii U and Xbox. Switch sold extremely well, but it was neither underpowered nor cheap. Had Nintendo cheapen out on the hardware, it would not have been as successful.  Yes, it's not as powerful as the PS4 or X1, but it's a handheld that covers a massive market which those two have no access to. Playstation is no longer Nintendo's direct competition.

PS4 Pro and the ONE X were late midgen upgrades with higher resolutions and little else, it's surprising enough that the ONE X seemed to perform similarly and often better than base Xbox 1 despite costing many times more (overpriced for what it was). Midgen upgrades shouldn't have as much appeal as fresh new consoles.

3. Series S's lack of a disk drive is an excuse. Series X is treated as a secondary platform by Microsoft and has been in limited production for well over 2 years, otherwise it's obviously more popular than the Series S. If its demand start to fall, that would be due to its potential consumers giving up and going for PS5 or a PC (digital only) instead.

PS5DE does outrank the standard PS5 whenever available. Like the Series X, its availability is limited (because it cost Sony more losses per unit sold, and the standard PS5 was selling out instantly everywhere for 2 years), so you're not really seeing its true potential. This isn't to say that it'd necessarily be more popular with higher availability than the disk model. After all, Playstation's playerbase is more physical biased than Xbox's.

4. The lack of dock means Switch Lite operates at lower maximum power. But yes, the lack of a feature in this case is the main reason and I didn't state the opposite. Regardless, spec and features both factor into pricing. So my main point still stands.

5. For the Switch 2, $500 (for the expensive model) should be the ceiling. The floor should be $300 (cheap model) and $400 (expensive model). Most people will gravitate towards the expensive model because, again, the average consumer is willing to spend more for more hardware compared to the old days, be it specs or features. As long as the extra specs/features are smart and justify the extra price, that's where most fans will go.