The switch is in a similarly awkward design space that the ipad was in when it first came out. People said the ipad was going to cut into their ipod touch and macbook air sales because at the time it appeared as a mashup of the two. I think to some degree it did, but it became it's own line which leaned fairly heavily on the same/similar library of the ipod (IOS) rather than OSX
So here, the switch is similar power level to their wiiU and I could see a lot of ports of wiiU software being republished for the switch. The fact there is no natural backward compatibility is kind of a bummer, but it's still early days, I think the full strategy of nintendo will come clear in time. I do think in time it will directly replace their home console line, but it might end up being a new parallel design space similar to that of the ipad.
Point to consider, nintendo hasn't been bleeding edge in regards to console power for quite some time, most of their consoles, home and mobile have fallen behind in terms of power and rather focused primarily on ease of use, polished, and family friendly content. Think about apple's arguments on their focus.and you might see more similarities.
The replacement for the DS line is a interesting idea though, and one I'm not quite sure will happen. When I think DS I think gameboy line, I thought gameboy when it became the advance, and when the advance became the DS. I don't see the switch as a gameboy even though it has a fully handheld mode. I kind of see the switch in handheld mode just as a better wiiU gamepad. That's just my observation, I could be totally off on that, it could be set to absorb either or possibly even merge both lines..