How do you know? Have you tried them on home consoles?

More people bought Resident Evil: Revelations for stationary systems than the handheld version:

http://www.ign.com/articles/2014/02/10/resident-evil-revelations-sells-11-million-units-on-pcconsoles

And the 3DS version is impressive for the 3DS-hardware, but every other version is much improved:

http://www.eurogamer.net/articles/digitalfoundry-resident-evil-revelations-face-off

Only speaks for your lack of imagination.

The Hobbit 2 (as most other movies) has an aspect ratio of 2.35:1, so the 3D-resolution of the 3DS would be reduced from 400x240 to 400x170.

Watching 2.35-movies in 170p... the thought alone makes me wanna puke.

well, at least Vita still able to work as a streaming PlayStation gaming handheld in future... 

I agree.

Never the less, even if the dedicated handheld market shrinks to the 30-50 million region, there is still profit to be made. Especially if theymanage to bypass retail stores. If Nintendo could do that in 5-10 years, with some similar startegy as the PS+, I dont see why they would want to leave. 8 million hardware sales/year with a strong attach ratio (6-8 full priced games revenue via digital distribution) could still be more then enough to continue and produce them.

Just like the DSLR market, its small, but people who are interested in it tend to spend more on the product, accessories and in case of hgaming, software.

I know that there is still rock bottom to be hit, but even in the 8th gen, the dedicated handheld market will manage roughly 100 million units. DIvide that by 2, and there is still plenty IMO.

There certainly is. Only problem is if that number is divided by half again, which would result in little to no profit. That's the real danger. 

It could happen, but I doubt it. The current core base is pretty large, and even today, when all households have several smart devices, we still see dedicated handhelds doing decent numbers, especially if software support is behind it. We wont see anyhting even remotely close to the 7th gen, when combined sales of handheld devices reached almost a quarter billion, but its not needed. Past consoles like the N64/GB prooved us that even small instalbases can provide plenty $$$ for the parent company.

At the end of the day, the survival of dedicated handhelds boils down to one thing: high quantity, quality software support. If that is mainatined, I see no reason why a company like Nintendo would bail out of the business.

Also, we could see companies try and enter in hybrid markets too: phones, smart devices, full blown consolesm, health accesories and even try and become a new fashion craze ( the "nerds" brandings are at their peek of popularity as of late). There is so little that we could deffinatly predict about their future, at the moment.

I think there will still be a place at least for the 3DS sequel simply that many mobile games still must remain simplistic due to control limitations. The hand held console has still a place for the further reaching games.

That might just be the problem. Developers are transitioning to the more lucrative and future-proof mobile platform, and soon Nintendo may be one of the only major developers left for their handheld. That is easily good enough for most people, including me, but the average kid no longer really cares about Nintendo's library nearly as much as a decade ago, they are much more interested in the latest mobile gaming fad. 

I think we as handheld console lovers tend to look past the truth in terms of today's market. It is simply shrinking at a worrying rate, and Nintendo and Sony will have to go back to the drawing board to keep handhelds alive. If it means merging with mobile to an extent, so be it. 

Home consoles sales are healthy though. Handheld sales are declining fast.

It sure is in a decline. I don't expect Sony to succeed the Vita. However, even though Nintendo won't ever sell as much as the DS, they can keep a hand held console going.