To extend on the point of direct competition against the Playstation * and Series X:
We all agree that the Switch offers a separate area it participates/competes in by being able to be played handheld, tabletop, or hooked up to a display.
With it essentially being a tablet, it also carries with it a set of expectations that people would associate with tablet/mobile devices.
With tv-only boxes, because the PS5 and Xbox Series X exist, there already is a set of expectations to be met by such devices sold for $500 (or close to it) in the 2020's. Now, the Series S can get away with having less GPU grunt because it's in an entirely different price bracket. "Yea, it's the lesser Xbox, but a couple hundred bucks saved is a couple hundred bucks"
Btw fellas, don't lock your thinking into there being only two form factors; handheld and stationary TV-only boxes. There's a form factor in between that's been around for decades;
laptops. And people intuitive know to some level that the laptop form factor has capabilities in between handheld and stationary big box. And correspondingly, have its own set of price to performance ratio expectations.
Yes, it's like the 3rd time or so I'm mentioning this. I'm gonna speak this into the existence eventually!
Now, I think that Nintendo should stick with the Switch form factor, so I'll keep this non-specific to any particular company:
Take a laptop, but remove the keyboard and mouse/touchpad. Maybe thicken it a bit, so it has enough depth such that you can have storage area(s) for controllers. 2 or 4 controllers, depending on size as well as the controllers themselves. For marketing, it's not a "Laptop" anymore. Now it's a "Party Box" or "Party Brick" (while emphasizing it dominating tabletop play but still having the option to hook up to a display). Hell, go even further; add a handle. Maybe add some latches to one side to be able to keep it closed more securely. Now it's a "Party Case".
Should be able to comfortably handle 192-bit or 256-bit of (insert latest DDR/LPDDR), depending on exact size and thickness. Hell, if you want a theoretical present day example: imagine Orin (the 32 GB variant), but drop the auto specific stuff and replace the 8 A78AE with 8 A78C, clocked up to maybe mid to high 2 Ghz on a N7 or N5 node (or should we even try to touch 3 Ghz? Hmm...)
More realistically though? Probably fast forward some years into the... let's say LPDDR6X era. Close to 2030, maybe? 192-bit LPDDR6X probably gets you to 409.6 GB/s; close to the PS5. 256-bit would be 546 GB/s. Add in a few generations of improvement to reconstruction techniques. A few more nodes. Further improved battery density. Imagine what one can do in the 28-35 watt bracket. Or the ~45 watt category. Or even that 'desktop replacement' 65 watt category.