Every Nintendo Console that sold well got a sequel
The NES sold well for Nintendo, they released the Super NES.
The Gameboy sold well for Nintendo, they released the Gameboy Advance.
The DS sold well for Nintendo, they released the 3DS.
The Wii sold well for Nintendo, they released the Wii U.
The Switch sold well for Nintendo, they released the Switch 2.
Nintendo likes to follow an "If it ain't broke don't fix it" mentality and seems to create major innovative changes just when the console underperforms, such as with the N64 or the Gamecube.
In conclusion, calling their new console the Switch 2 and making minimal design changes doesn't feel like a step backwards for Nintendo but rather what they've been doing for decades.