I think the reason they say they aren't competing directly with Sony or Microsoft is because the way they approach things are different from those two companies. All three are still competing in the realm of dedicated gaming devices, of course. But Nintendo's strategy is so different that we could say that they aren't competing. Sony and Microsoft fight in the red ocean. Nintendo has, since the success of the Nintendo DS and Wii, sought out the blue ocean. That is, Sony and Microsoft fight over hardware power and existing demand within gaming landscape. Nintendo is constantly looking for "new ways to play," trying to capitalize on things the other two aren't doing with their hardware.
360 and PS3 was a classic "whose console is stronger and has the best-looking games" Wii ditched power in favour of pushing motion control as the key focus of their hardware to grab people. That worked.
XB1 and PS4 is, once again, a repeat of that, while the Wii U once again ditched power to go try second screen gaming in the living room as the key focus. That didn't work for a million reasons, despite it being (personally speaking) an okay idea.
PS4 Pro and Scorpio is still purely a tech-based battle, while the Switch will be trading off power for easy portability of a home console (but without the handle and constant need for an AC adapter).
Of course, this attitude from Nintendo comes from two places: the aforementioned success of the previous DS and Wii experiments and the company's belief that three super powerful consoles cannot exist in the gaming ecosystem at once. And I don't think they're wrong about that. The 7th gen was the first time that console sales weren't a curbstomp battle with a distant second place, and an even more distant third place. Competing indirectly instead of directly worked. Granted, Wii U's failure to gain any traction have made eighth gen a pure curbstomp once again. But I have faith that the Switch will gain enough popularity to split the market into rough thirds once again.
Fourth Gen Worldwide Market Shares
- SNES - 52%
- Mega Drive/Genesis - 35.8%
- PC Engine/TurboGrafx-16 - 10.6%
- Everyone else - 1.6%
Fifth Gen Worldwide Market Shares
- PS1 - 70.1%
- N64 - 22.5%
- Saturn - 6.3%
- Everyone else - 1.1%
Sixth Gen Worldwide Market Shares
- PS2 - 73.8%
- Xbox - 11.4%
- Gamecube - 10.5%
- Dreamcast - 4.3%
Seventh Gen Worldwide Market Shares
- Wii - 38.2%
- 360 - 31.7%
- PS3 - 30.1%