There was never a point that the Switch was going to be as powerful as the modern systems and completely portable at the same time, without being ridiculously expensive. I thought they'd get close to the lower end of an Xbox One, there's nothing saying exactly where they place at the moment till people can open it all up and run tests, somewhere between a Wii U and Xbone I'd assume, but I think it's much less important for them to 1:1 compete with the other systems, and instead find other ways to capture the market.
I think the Switch is that. They've already proven they are at the top when it comes with handhelds, so if they can deal with that market, combining it with their console market, they have a way to stick around, without just fighting a straight up 3 way battle with Sony and Microsoft, which they wouldn't be able to keep up with at this point and they would lose again. Heck, the Wii was never as powerful as the 360 and PS3 and the Wii whooped their asses.
There could be an issue of third party ports and such, which has the possibly of being problematic for them like it was for the Wii U, but as it seems very much like their handheld replacement too, it has the potential for a real massive library once 3DS development starts winding down more.
*EDIT*
One thing to add that I am worried about and can slightly piggy back off of the expensive accessories aspect, is that most of the games for the Switch are either full priced or close to it, of the ones announce at least. 1 2 Switch looks like something that should be a pack in game, or 10 bucks on the eshop, but that's a 50 dollar game. Super Bomberman R seems okay, it's your basic Bomberman with a little extra and it's 60 bucks. ARMS I heard is genuinely good from what people played, but seems fairly basic for the most part and that is 60 bucks. Skyrim is 60 bucks, but that doesn't release till the fall and by then, Skyrim on PS4 and Xbox One are gonna drop in price. Heck, one of the earliest available Switch games to pre-order was Lego City Undercover, a nearly 4 year old game, and that is 60 dollars.
I was initially gonna grab like Super Bomberman R, ARMS, and 1 2 Switch for the game meetups I go to with a local gamer group and that's gonna be stuff within the first month or so, with Mario Kart 8 Deluxe coming out at the end of April, but I can't justify 170 bucks for those games at all. Combine that with the expensive accessories I'm likely to buy, the system might be getting off to a wobbly start, even if I think it has a pretty solid first year of games to get.