Nintendo has been state of the art with the Nintendo 64 and GameCube and probably the Game Boy Advance in the same era. It was an era where - with clever engineering - you could be on the cutting edge and still sell your consoles for cheap. With Nintendo, it's always about cost control.
They learned that being on the cutting edge does not help them sell more hardware or games, as the N64 and especially GameCube sold below expectations. They have not been on the cutting edge since then - nor were they really before. The Switch is pretty great because although it was not really on the cutting edge it had relatively up to date hardware at launch "for Nintendo" - especially compared to its 3DS and Wii U predecessors.
- Genesis was out but we were still mostly playing NES games.
- Playstation was out but we were still mostly playing SNES games.
- PSP was out but everyone stuck to GBA.
- I was on hiatus from video games when Wii happened, but I was aware that most my friends had one, even if you wouldn't know it, because ps and xbox were more popular with (the minority of) people who want to talk about video games all the time.
My guess is that Nintendo has a few key parts of their strategy: More casual gamers don't actually care about having the best graphics (corollary: more casual gamers won't spend an extra $100 on better graphics), you need something that feels new & novel to attract the attention of more casual gamers and motivate them to buy, and technical constraints foster the kind of creativity that does that. Perhaps even more so than clever hardware gimmicks.
They learned that being on the cutting edge does not help them sell more hardware or games, as the N64 and especially GameCube sold below expectations. They have not been on the cutting edge since then - nor were they really before. The Switch is pretty great because although it was not really on the cutting edge it had relatively up to date hardware at launch "for Nintendo" - especially compared to its 3DS and Wii U predecessors.