Your price point of $1000 for a quality tablet may be slightly dated...a quick search of Amazon shows the largest, newest tablets from the biggest brand names generally around $500, with slightly smaller and older tablets generally falling in the $100-$300 range. Also, I'm finding absolutely no indication of price on Switch from Nintendo, and recent years have seen major console releases generally launching with higher prices than consumers were expecting.
The price for the Switch has been quoted as $300 (well, $299, great savings there) for the base model, and $400 for the bundle version which I'm assuming from how it's a "bundle" will include Pro controller(s) and maybe that fancy car holder. Probably not the car holder.
Meanwhile, I'm not sure where you're looking, but Surface Pro's are going for well over a grand on Amazon, with prices for similar tablets you could conceivably play games on always hovering around the 700-900 mark and above. We don't, of course, know how much of an OS the Switch will have. We don't even definitively know that is has a touchscreen, though it would make no sense for it not to have one. But it's pretty certainly going to be a multimedia thing in addition to a console (given that it supposedly streams video), and most people who would buy a beefy tablet for mobile entertainment, would likely go for a Switch just on that premise alone. Sure it's not going to show you that Word document your client sent you in the mail, but it'll be a portable entertainment system... a portable Nintendo Entertanment System, if you will - and for a $300 price, I'm pretty certain it doesn't need to be more than that.
It's still very early to be making the call that VR is failing. The last few generations of gaming consoles have each taken longer than the last to see any substantial release of games, with the most recent generation taking more than a year just to see a few decent games start to trickle in, and more than two years for the surge to really start. VR has been out only a few months, and developers are showing interest, suggesting that we may well see things really take off in another year or two.
PC VR is floundering because of lack of adopters, not only because of lack of games. The hardware is just too bloody expensive, especially when you need a great PC to go with it. PlayStation VR is just taking off, yes, and yes it will eventually have games for it, and it's much more affordable especially when it works on a regular PS4 already, so that greatly expands the adopter base, and makes the platform a lot more interesting for developers. But it's the mobile VR that's actually going forward, because the expectations of it are lower, and the requirements are barely there, with a wide open base of people who can try it and develop for it. The Switch, with its excess of power and modular design, can easily snap right into that mobile VR market, and might bring Wii-like motion controls in there to boot.
Yeah, that's not innovation though, it's refinement. We have had fully featured portable games for a while now, Nintendo is just making them a bit more convenient, and likely higher quality. The only part that's really innovative is the detachable controllers, allowing for motion controls and playing with a friend, which have not previously been options in a single portable system. So the question becomes, do people really want to swing controllers around with their friends in public settings while staring at a tiny screen? I guess time will tell.
I think you may be missing the innovation here. It's not the fully portable games - tablet PCs did that for a while now. Like I said, I play Skyrim on mine, among other things. What gaming consoles did before, was take a universal, powerful, and expensive system - the desktop PC - and give it a more streamlined, dedicated, game-focused package that you can keep near your TV and have party games on with friends.
The tablet PC, the thing that's set on overtaking the software markets alongside the smartphones, is just a PC that you can take with you anywhere, it is no more designed for gaming than a regular PC. Like with a regular PC, you can attach peripherals to it to make playing games easier, or you can play games designed for its own often limited interaction abilities, but it lacks gaming and party-gaming power in the same ways that a regular PC does.
What Nintendo did, is make
a game console for the tablet PC generation. That, is innovation.