I agree that the DS has demolished the PSP. And I question why Sony thinks they can continue in this space without .
I think the biggest issue Nintendo needs to address is connectivity and quality of the Nintendo network.
Wii has connectivity, but marketing of it is brutal (I didn't even know my Wii had WiFi for the first year). And the building and marketing of games that can be played on the Wii network is almost non-existent... Nintendo needs to establish itself in this space much more in the eyes of non-Nintendo gamers.
That's what makes the iPhone attractive, you have connectivity, gaming, mp3 player, phone, and camera in one device. The value is massive and justifies its cost. DS has to justify its value and start encroaching on the phone and cellular connectivity space as well.
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