"We have considered it and have decided to price our console exactly what we had already decided, which is below what real video game consoles cost, but we will still overcharge you for the hardware we sell to you. But don't worry, we considered it."
Biggest problem of Nintendo systems has been how the prices of games just don't fall at the same rate. So even if the console is cheap price quickly goes past the the lifetime cost of Sony or PC even if the initial cost for both systems are higher.
Nintendo are very much aware what their business model is on this one, and who they are targeting.
For a lot of consumers, especially those who are lower income, the single most important factor is how much money you need to spend at once.
This is especially true because a key market for the switch is children, who have no direct purchasing power themselves, and depend instead on adults to buy it for Christmas and birthdays. So initial cost of entry is critical.
Simply put, 'parents' who are buying a console for their kids and expect to buy new games only rarely, have quite different needs to 'gamers' who are buying for themselves, and want new games often.