Clearly they are not doing as would be ideal. They could have a bigger install base by now and they are servicing the Switch with software well so it is not like they are burning current customers in droves or something.
Clearly they are also leaving some potential customers out in the cold and unhappy.
But...you both cannot fault them too much for being cautious after Wii U and 3DS launches and cannot expect them to outbid Apple. I imagine they are doing about as well as they could be doing, given the position they got themselves into (keeping in mind their decisions that got them there weren't unreasonable).
Also, we've yet to see what the fallout of this situation is. If they get out of this mess this fall or going into next year, I have a hard time seeing it damaging eventual sales numbers in any great way. I also imagine that knowledge of the sort of situation it is in and the sort of demand it has will offset the install base not looking as high as it could look to third parties considering Switch.
So as a business, I don't think they've dropped the ball so much as found themselves in a bad way. (And not the worst sort of bad at all--Switch is still doing well).
They have failed customers though, in the short term at least.
