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Soundwave said:

I said it was bordering on a disaster, not a disaster per se. 

It is bad for sure. The thing about it is this is Nintendo's main platform, they can't afford to have weakness or decline in this product categorey. The other problem is "turning it around" operates under the assumption that Nintendo is in control of the situation, which they are not. 

The decline of the traditional handheld business is largely out of their control because its due to phones/tablets.

Nintendo themselves has done almost everything possible to try and accelerate the 3DS -- $80 price drop, 2 new model revisions, Mario/Mario Kart, Monster Hunter exclusivity, casual games (Brain Training, Style Savvy, Art Academy), and a host of very good titles like Fire Emblem, Bravely Default, SMTIV, Luigi's Mansion, Zelda: ALBW, Mario & Luigi RPG, Animal Crossing, and of course Pokemon X/Y. They've put so much resources into the 3DS that the Wii U has suffered clearly. 

This situation is simply out of their control now, they can't do much of anything to stop kids from using tablets/phones and the odds of them convincing teenagers/adults to carry around two devices that can play games instead of just one are pretty slim. 

The fact that you think Nintendo has nothing up their sleeve is funny, really. Nintendo can still release games that would draw in more people and also slash the price considering they haven't formally done that in awhile.

There's no denying that the mobile market has impeded on the Handheld market, but not to the extent that you're talking of. Nintendo can still get people to buy their Handhelds purely based off their IP's alone. The 3DS is guaranteed to do at least 60 Million LT. And that's with a console that had a horribly botched beginning. 

What Nintendo really needs to worry about is their horrible performance in the Home Console market. That's what is worrying the most, especially considering they still act like their Home Consoles are a major player in that market.