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Success.

Did it outsell Nintendo handhelds? no.
Did outsell all previous handhelds competing against Nintendo handhelds? YES.
Did it make Sony and profit and get them a good foothold in the handheld market? YES.

Sony did a great job overall. The PSP is a pretty nice piece of hardware and has a decent library. Best of all it also helped Sony regain some of its lost walkman market from the ipod, granted very little, but the media features of the PSP are a major selling point for a lot of people. I would say much more than the Bluray player is on the PS3.

All in all it has sold very well comparatively speaking and is a profitable venture for Sony. Thus, a success. QED.