In my humble opinion the problem is that Sony has failed to properly assess the market. From my perspective I see three different types of handheld gamers. One major and two minor. The major handheld gamer is the child audience ranging from approx 7-15.
After this the only people left playing games on handheld consoles fall into one of two categories (excluding japanese, im unfamiliar with the culture and won't pretend to be). These are the Minor categories, and consist of the left overs from the child category who continue to play these games and are now hardcore handheld gamers and the casual gamer (insert older gamer) that has been introduced due to nintendo's brain training series (among others) and clever marketing.
To give you an idea, my mum's best friend (who is i imagine about 65) wanted to buy a ds because she wanted to keep her mind sharp, however she didn't understand that you had to buy a "console" and then also the "game" in her mind she thought it was just all the same thing... ahh nintendo, we love you.
Sony has failed to properly address the core handheld market of the children by offering products similar to there home consoles which target 12-25 as the core audience, and has not even considered the casual audience.
Instead sony seem to have decided they would simply create there own new handheld segment, which as we can see has proven to be most successful.
