I'm looking back at this now and I continue to shake my head over the sheer stupidity of this decision. I know you can find okay deals on them in some places, but even then you pay almost twice as much for generic cards. Did they not know this would just spark hate among the handheld gaming community with those high prices and keep them from buying the system? Their excuse is it's because they don't want games to be pirated, when their real reason is to manipulate you into forking out more money. I don't get that 3DS doesn't get modded even with traditional SD cards. I swear I held out on buying one for a long while because of those expensive proprietary memory cards. Do you think they really could have combated piracy with SD cards? 

They were planning to profit from everything, that's what.

I assumed it that system was being sold a loss (or a very small profit) at launch, and selling proprietary cards was a way to make up that expense.

Piracy was also an issue I'm sure...but like you said, it seems it hasn't been a problem for the 3DS yet, so I'm inclined to think the expense is a big part of it.

It is a pain though...especially with how handheld devices are ideal for digital games.

Nintendo manages to keep control on piracy through their firmware updates. So I don't know if Sony couldn't be bothered.

I am guessing they thought that the vita would be so successful that the memory card prices wouldnt matter at the end cause the system would be good enough to worth the high asking price. Plus there is that "anti-piracy" nonsense but its like, Nintendo went with SD Cards and Piracy isn't an issue on the 3ds so I think its less cause of "anti-piracy" reasons and more so that they wanted to be greedy but it backfired on them. So although, I dont't think Vita is making them a loss, it sure has hell isn't considered a successful device, thats for sure

Piracy and Profit,

the piracy on the PSP probably exceeded even the ease of it on PC at one point.

And it worked, because I bought a large one

While the pricing is absurd for the memory cards, the anti-piracy measure is a damn good arguement. I do think they could've worked out a better solution or found a cheaper way to make a proprietary format.

Money.

Cash money cash

The official reasoning is piracy, but well written and constantly updated code would alleviate all of those issues (just look at the 3DS, standard SD cards and no problem).