To try and help those that are debating that Switch doesn't compete with PS/XB, let's (falsely) claim the following:
- Switch can only be played as a portable
- There is no overlap in game libraries at all between Switch and PS/XB
- The ~130 million Switch sales and ~1.1 billion software sales are all by or for kids under the age of 18
- Switch is only as powerful as one of those Tiger Electronic handhelds from the early 90's
Above I took the standard arguments that some posters like to make and dialed them up to 11.
Billy walks into a game store or goes to the games section of a store with a limited budget and limited time to play and can choose between buying Zelda Tears of the Kingdom or Horizon Forbidden West. They choose Zelda Tears of the Kingdom and proceed to play it for 100 hours. In this scenario, Nintendo gains the sale and mindshare while Sony loses. Also works the other way if Billy buys Horizon instead. That's because Nintendo and Sony are competing.
We can try and get super cute about it and claim that Switch owners only play it outside of their home, but we know that's absurd (and btw.. would still compete due to both remote play and cloud). We can make similarly stupid arguments that PS5 and XSX aren't directly competing because their controllers are different, or cloud options, or one is better at playing blu-rays, or one is more about services, etc.
TLDR: PS/XB/SW are all dedicated gaming devices that compete with each other. It's really not complicated. When one is successful, it's often at the expense of the others.