The definition of blue ocean is the creation of an uncontested space in the market that by virtue of nonexistent competition allows for very high profitability. As the only hybrid console on the market coupled with a monopoly in the handheld console market, Switch totally fits the bill.

Also, what I remember of the time before the launch of Switch is that the audience that you describe as "core Nintendo audience" was extremely skeptical, illustrated by the lifetime sales predictions that were made. The so-called masses were the first ones to support Switch and the "core Nintendo audience" had to be turned into believers.

And this right here is why Nintendo is too stubborn to be better with legacy content, game preservation, bringing back obscure IPs, etc. They can stick with NSO and its Expansion Pack plus some GameCube ports (and a remaster and remake) and call it a day. It's clearly a lot of the new stuff, The Super Mario Bros. Movie and a mega-popular Mario Kart (originally on Wii U) that are making the big bucks.

How are the Switch profits compared to the Wii/DS era if we account for inflation?

Yeah the Switch hasn't abandoned the blue ocean at all; it has simply married a blue ocean approach with a strong commitment to the core/enthusiast sector.
The DNA of the Wii/DS is alive and well in the Switch, in its motion controls and software like Ring Fit and Switch Sports.

You could remove those two games and I doubt the system sells that substantially less, neither of those games are even in the top 10 Switch LTD sellers. That's the difference, you remove Wii Sports and Wii Fit from the Wii and what does the Wii sell? 

The Switch has the DNA of the N64 (finally actually fulfills the mainstream appeal of 3D Mario to 2D Mario levels or higher for example, BOTW is really the true successor to the N64's epic 3D games like OoT and so on), it has the realized potential of the GameCube (Animal Crossing finally fully realizing its full franchise potential) and very clearly even has the DNA of the Wii U too. 

If anything actually it's surprising how little of DS' heritage is in the Switch, they barely support touch based gaming at all and didn't even bother with a Nintendogs nor did Brain Training get any kind of big push, they haven't really tried to iterate on touch as a input method even though it is arguably the most intuitive to non-gamers. Again not really shocking there as smartphone gaming has cannibalized that market way too much. 

Blue Ocean philosophy goes way beyond just those two games. The entire concept of the Switch, seeking an unexploited space in the market rather than directly competing with what the competition is doing, is the Blue Ocean strategy.

Like the Wii and DS, Switch opted out of pursuing parity with Playstation and Xbox and prioritized breaking down barriers to entry for consumers instead. 

You can find heritage from many of Nintendo's previous systems in the Switch, but the Wii and DS are very well represented in its DNA.

People may not want to admit, but really the truth is the system the Switch has the most in common with is the Wii U, it has more of its a DNA than any other system right down to its two most important games are literal Wii U titles, but that isn't the "sexy story" so it gets spun in every other way but that. 

That just goes to show how important *execution* is to any hardware system. Does a system look like something Batman would use (and thus acceptable to adults and kids will go along with it because it looks "cool" anyway) or does it look like a Fisher Price toy (and thus you've cut off 65% of your audience). What are your games in the first 12 months? How many of those games feel "epic" and feel like "I must buy a hardware system for this?". NSMBU and Breath of the Wild as respective launch titles both send very different messages about what the hardware is about. Do they make people go "wow"? Especailly (yes) core gamers? etc. etc. etc. etc. Half portability isn't actually useful to most people, you need full portability to have a functional piece of hardware that people can look at and go "oooooh, ok, yeah I get it, that is cool". Do you have lame launch commercials aimed at 10 year olds and grandpas buried on the Disney Channel when introducing your system or do you have fairly "cool" commercials that are airing during the Super Bowl with music from the decade you're trying to sell your product in? The difference to all of this stuff matters a lot. 

Switch does inherit a lot of software from Wii U and does feel like the realization of a hybrid concept that the Wii U was a half-baked version of, but I feel their core philosophy is very different.

The Wii U's problem was that its central gimmick added a barrier to entry rather than removing one. It was inconvenient, unnecessary, a solution in search of a problem. It complicated gameplay input, it complicated multiplayer by adding asymmetry and by each console only supporting a single Gamepad, it got in the way of just picking up and playing games.

Switch on the other hand was all about making it easy and painless to pick up and play whether you were at home, at work, on holiday, on the train, whenever and wherever.  

Meanwhile Sony and Microsoft...are doing the opposite of Nintendo a lot, and not sure how well that's working for them in comparison

I mean the Switch controller has just as many "hard to use" buttons and analog sticks as the Wii U does. 

I don't think that's it. The details matter more than people think. Half portability versus full portability is a huge difference in functionality which isn't really all Nintendo's fault (Iwata said they tried to make the Wii U fully portable, it simply was not feasible with the technology of the time). 

There's a huge difference too between Breath of the Wild being your showcase title ... what does that communicate to the audience ... it says that not only is this a portable console, it's a portable console that can even deliver that type of epic, Game of the Year, beautiful open world, type experience ... the type of game you would never dream of getting on a Game Boy or DS or 3DS or even PSP or Vita or iPhone ... you would only ever expect a game like this on a stationary home console, but here it is, and you can play it in your living room, in your van, at the airport, etc. etc. Bingo, bango, bongo, everyone can understand that and get behind that concpet. 

If you tried to sell this concept with say ... New Super Mario Bros. U ... that doesn't work likely any where near as well, that's just communicating "see this same ol' shit you played a few years ago on your DS and Wii? Well here is again like microwaved left overs". That doesn't really get much excitement going.

Ideas also have their time, the Virtual Boy concept would probably work 10000000000000000x times better today (a cheap-ish VR headset) because today it would have full color, reasonably good real 3D graphics and a full HMD. The Wii U was trying to be a hybrid (play portably on a screen or on your TV ... but within a very restricted zone), the technology just wasn't there. Execution is honestly more important that the core idea ... lots of companies, even Sony and MS have plenty of neat hardware ideas, they're a dime a dozen. It's whether you execute properly and have the right software at the right time.