I don't think they'll take a loss (they won't need to), but I'm fully expecting far slimmer profit margins than any of their current models.
It's worth keeping in mind that Nintendo are almost certainly making
very healthy margins on the current Switch hardware. I just did a rough back-of-an-envelope calculation based on their gross margin and sales split from their FY22 report, and I'm estimating about a 33% gross profit ratio on hardware (ie console) sales. Obviously this is very rough, and could be lower or higher, but given that they launched at $300 in 2017 at around break-even, a reduction in costs of around a third since then, with the same selling price, isn't unreasonable.
To put this kind of gross hardware margin into perspective, a quick search for Apple's gross margin on hardware yields
this article, which claims a 31.5% gross margin for product in FY20, vs 66% for services. That is, Nintendo are likely making a similar margin on Switch hardware as Apple, who are known for having amongst the highest hardware margins in the consumer electronics industry.
Now, with the new Drake-based model, positioning matters when it comes to expected margins. If this was a PS4 Pro style model, with little-to-no exclusive software, and no plans for it to replace the existing Switch, then you'd expect Nintendo to price it with similar margins to the existing lineup. I don't think that's going to be the case, though, and it seems neither do most people in this thread. Based on the known hardware, both the performance and feature set are overkill for a device purely designed to play higher-resolution Switch games, and the timing, with possibly 6 years elapsed since the original model, it seems very likely that this is a successor to the Switch, in function if not in name.
If Nintendo are intending this to be a successor to the Switch, then they're not going to be pricing it for Apple levels of profit margin from day one. They have a very strong incentive to sell this new model over the previous Switch models, as someone who buys a base Switch in 2023 will probably only have a couple of years new software to buy at most, whereas someone who buys a new model will have perhaps 6 or 7 years where they can continue buying new software for it. As high as Nintendo's margins are on Switch hardware right now, they're far higher on software, and selling a new model at a low margin will almost certainly make them more profit in the long run than selling an old model at a high margin.
Several people in this thread have said that they won't charge $400 for the new model because it's far too much additional value vs the $350 for the OLED model, but that's entirely the point! The new model has to be obviously far better value than the existing models, because Nintendo will make more off the new model in the long run, and they don't want anyone to buy the old model unless they simply can't afford the newer one.
This is exactly the reason that Microsoft discontinued the Xbox One S and X as soon as the Series S/X launched. They would have made more profit (or probably made some profit, vs relatively large losses) by still selling the Xbox One S, and they are still supporting it with most of their software releases a couple of years later, but in the long run they're better off selling a new model which they can make greater software profits from rather than sell the old model which will bring limited software profit. Ditto with Sony all but discontinuing the PS4.
My expectation is still $400, with Nintendo pricing it around break-even, and keeping either the original or OLED model around at $300, with the Lite still at $200. But I wouldn't even rule out $350, potentially discontinuing both the original and OLED models shortly after and leaving the Lite as the only original Switch model left.
