Shouldn't Nintendo sell an emulator for a small price? It will likely benefit the eco-system and will impact sales positively.
I remember emulating SNES games on my old Windows 98 rig-from-hell and enjoy a much better experience than with the service they provide. It's a shame really...
The real issue is that they didn't update the Switch hardware for so long that the Steam Deck became a better Switch than the Switch. Maybe they'll fix that with the Switch 2.
I think the key thing with emulation is that it can be supported on various hardware, and then there is also the aspect that downloading ROMs can be done for free.
Brands have to maintain a consistent niche within their core market.
Japan and TW, which are Nintendo HQ's core market, and Nintendo of Korea (which is staffed by Japanese and some Zainichi) view the Switch as a child's toy and something that is supposed to be family friendly.
On the other hand, in North America the Switch is increasingly marketed based on Millenial/Gen X nostalgia for the SNES/N64/GameCube/Wii, so the purchasing base is much more adult.
For most Japanese companies, there isn't much value in making strategic changes to core corporate operations in order to accommodate western tastes as it can contradict with tastes in the Asian market, and this is why "Nintendo of America" and "Nintendo of Europe" is essentially a separate entity from core Nintendo that mostly works on marketing, localization, publishing, QA, and some backend infra work for Nintendo Online.
This is the same story with Sony, Nissan, Toyota, and other Japanese firms as well.
You'd be talking about suddenly adding support for every game they've ever made running on a million unique hardware configurations. There is literally only downside for Nintendo's brand in doing such a thing.
"I want 120 FPS. Or it's suboptimal!"
"I want an AMOLED, not just OLED. Or it's suboptimal!"
"I want keyboard input. Or it's suboptimal!"
And on and on.
A console generation is 8 years, on average. Nintendo's approaching the end. If we're making fun of Nintendo because a smartphone is more powerful, that's a testament to how fast phones have become, not a testament to Nintendo's sluggishness (as the Tegra X1, at the time, was the fastest mobile graphics chip available. What are they going to do? Call the generation after four years?)
Emulators are the antithesis of performance consistency. I love them, but there's zero way Nintendo (in its current form) ever officially supports an emulator you run on a typical PC.
Yuzu also has things that just don't work well for most players. Super Mario Odyssey depends quite a bit on HD Rumble; which a Yuzu player almost certainly won't get unless they use a Switch controller. But why would an emulator user buy one and not use the Xbox controller they have lying around?
Yuzu also tends to fuzz the timing for complicated games in weird ways. I saw an emulated copy of Super Mario Bros Wonder someone was playing, and I tried a very hard level (5-out-of-5 difficulty) called Fluff-Puff Peaks Special Climb to the Beat. Super tricky (https://youtu.be/4PcBDeCKa0Q).
On my Switch, I could beat it on a few tries, consistently. On his emulated version though... I could not beat it. I tried over and over - with a Pro Controller - and could not beat it for over an hour. I pulled out my Switch version, again, a few tries, beat it. I swear Yuzu was subtly, imperceptibly screwing up the timing and physics. It wasn't a slow computer either - 13th Gen i5, RTX 3050. Not the latest thing around, but should be fine for Yuzu.
I haven't used Nintendo Switch's Online emulation service, but my understanding was that the N64 emulator for it was initially very bad (though I've heard they fixed it?). On emulators for Windows, playing the same game, they would boost the resolution to 1080p [1] and bump the frame rate up to 60fps for a lot of games, while not giving any real negatives. For example, I think Conker's Bad Fur Day plays much better on Project64 than the original cartridge, so I'd define that as "optimal", and probably better than it would be if it were on the Nintendo Switch service.
EDIT:
[1] Actually I could be off on that number. I thought it was 1080p, but I think that doesn't jive with aspect ratios. Still, it's a higher resolution than what the original hardware gave us.