Which is why so much of Switch potential in this regard is about multiplatform: letting developers chase the west on PS4 and Japan on a Switch. If said developer isn't chasing Japan, but content with their niche there and just looking west to supplement, then the Switch has limited appeal. If the developer is looking to be on a portable console in Japan and be on the main console of the west, then Switch has appeal. It is this sort of DQXI calculus that Nintendo has to encourage by lowering the barriers to choosing to do that.
So: a) It needs to sell to Japan, b) Nintendo needs to convince developers of this vision, c) it needs to be easy to port too.
Unless mobile completely takes Nintendo's lunch, the device will sell in Japan through, say, Pokemon, and probably outsell PS4. The more it outsells PS4 by domestically the better.
B is the most dubious at this time, but it feeds into how far A goes, which also feeds into B in terms of bringing in late-comers. Moreover B is going to be diversely attractive to developers. Again, less attractive to companies buckling down on niches and companies pushing for competition with western AAA (e.g. SE with FFXV). More attractive to companies looking to grow domestic audience.
Nothing we have had leaked discounts the possibility of C). More power would be nice, but that could cut into portability and hurt A). Moreover, power isn't the most decisive issue with Japanese software.
Edit: And I'll repeat: Switch is exactly the device, conceptually speaking, which Nintendo should be putting out. Exactly. Is the specs/price ratio going to be exactly right? Idk. But this device has so much potential. Despite that, it is very much still an issue of making that potential actual.