Years ago I called out on Ninty for really wanting to get in on the mobile market. Short of releasing a "Game Boy Phone" they did get in on mobile games by approving ports to the 3DS.
This is their answer to get in on that market. I expect an early trickle preceding a downpour of mobile style shovelware to hit the Nintendo Online Store for the Switch sometime soon.
This is basically the Shield Tablet 2 for all intents and purposes, using a variant of the chip for that plan from NVidia. Hopefully they realize that if they try and push their already smaller dedicated fanbase into whaling their profits, they might take another hit like the Wii U. The Wii was a huge hit because of the accessibility, and that fact that 70% of people bought it for Wii Sports and maybe a golf game, at least in the long run. The Wii U didn't appeal to those customers because they thought it was just a $300 add on for the Wii, and because it didn't offer the same appeal to those customers. Thus Wii U sales relied on their core fanbase to remain barely profitable. Which is why Nintendo games take so long to depreciate in cost, because those fans will pay those prices.
They might score some outliers with this but then again, they are now encroaching on competing with tablets (iPad, myriad of Android, Surface) and cell phones. Since they will quite likely start to carry a decent amount of similar titles, and basically fill a similar role, except potentially without the open versatility of those things. They aren't really competing in the console market too much anymore, mainly handheld, as their hardware for home use is much more niche than an Xbox, PS4 or PC.
We'll see if they do well in time. That lower internal storage and expensive peripherals for those who want a home console with all the trappings will slow sales for a bit.
Also, flash storage doesn't mean the game will load instantly, it all depends on the hardware inside. Transfer rates, RAM/RAM speed, swap/page space, CPU and etc. There are plenty of examples of such games taking at least 10-20 seconds to load properly. Though it is still faster than HDD or optical media for sure.
