But does the PS5 need to compete at the Switch's level in order to sell 8-10m? I don't think so. It'll have a a strong selection of games that will not come to the Switch as listed. Ultimately they're fulfilling different interests. Will the Switch eat into Playstations audience? Probably, but not by an amount which stops PS5 from succeeding.
You are asking the wrong question. The right question is "what will people looking for a home console buy"? In the previous generation the options were PS4 or Wii U. Given those options about 9-10m bought a PS4. Today the options are PS5 or Switch. Those same 9-10m people are not going to show up for the PS5. A good chunk of them are going to just have a Switch only and be done.
People didn't skip the Switch just because they apready had a PS4. The narrative that people only buy one console doesn't exist in other markets, not sure why it will exist in Japan when the Switch still fundamentally lacks the majority of PlayStation software. Famitsu's most demanded game is a PS5 exclusive. Everywhere else we see the Switch sell alongside PS5/Series X. Especially with the 4 year gap between them, it doesn't have to be either or... People who bought a switch 4 years ago, can be partial to buying a PS5 today.
We also have to acknowledge that the Switch is appealing to an expanded audience too. I dare say the majority of the audience were never going to buy a playstation in the first place.
No one disagrees with the notion that Switch will eat into playstations audience, the point is that
1. Playstation will still have major support from 3rd parties that the Switch will not.
2. This will secure playstation 5 a decent future which will realise itself once stocks allow.
Honestly more meaningful then the back and forth would be for people to just give their predictions for Playststion 5 hardware. I say 8-10m, what do you say?