Thanks. It's a good article that I enjoyed reading.
But, it really isn't. It is an article that lines up with your thought process, throws around fancy buzz words like anti-consumer and essentially speaks to the vocal minority that seems to believe this item was a lock and Nintendo is stupid for not making more, not anticipating it would be an item that sells on eBay for $200+ and so forth.
The issue with this is that some people make these things out to be simpler than they actually are. Speaking for myself, I never would've guessed the NES Classic would be sought after. Plug and play devices are nothing special, over 100 million Wii's sold with the ability to easily buy/play these games (you could argue this is more money, but not with the price it is going for on eBay...) and so forth. There are also impossible to see circumstances, that really made things far more awful than they should've been.
As another article points out ( http://www.polygon.com/2016/11/21/13705494/nes-classic-edition-ebay-profit ), eBay offered a guaranteed $226 to anyone willing to sell an NES Classic. This essentially means anyone looking to sell one was guaranteed nearly 300 percent profit, which undoubtedly increased reseller interest.
From there there are considerations like the type of deals they made, the amount of profit the system actually brings in and Switch demand. It's possible they thought 1.5 million was enough, so they made deals with companies for 1.5 million units and when they saw the demand, they tried to make a new deal, which fell through for one reason or another. It's also possible the system was not terribly profitable. Even if it is cheap to make, things like distribution, license deals and so forth impact the profitability. Finally, demand of the Switch seems far greater than Nintendo anticipated, so they had a dilemma. Increase production of the NES Classic, increase Switch production, increase both or keep them the same. It makes sense they would put all their efforts towards the Switch, falling in line with their comments on production being doubled, than bother continuing the NES Classic.
Don't get me wrong, it sucks and I feel bad for anyone who genuinely wants one, but some people try to make complex things into simple things like "even though people want to buy, why doesn't Nintendo want to sell?!" Especially when they're always been a conservative company.