The PlayStation Vita has more in common with smartphones (aside from actual phone calls) than it does with its only other handheld console competitor (at least right now). Sony is simply putting itself into a position where it is not just fighting for gamers, but also portable media users, and in that market, the Vita will definitely lose to Apple and Samsung. Hell, its even competing against itself with its own Experia phones and tablets.
Price and content will be the biggest reasons why portable console gaming can continue to thrive alongside smartphones and their non-phone enabled cousins like Apple's iPod or Samsung's Note and the full range of tablets. Content is easy for reigning champion Nintendo as simply put, NO ONE has the first party content that Nintendo touts. Between Pokemon and a variety of Mario based games, Nintendo has this area easily dominated. Sony, on the other hand, does have some quality IPs, however, they are IPs that are quickly matched by 3rd parties and exist in almost the same playable forms on either their home consoles or mimicked on every other portable device. Then we come to price. These 3rd party cousins also offer them at pennies to the dollar on iOS, Android, and Windows platforms. Nintendo figured this issue out early and took a massive reduction in its new 3DS in order to begin saving the platform. Sony cannot afford to do the same as its opening price is already selling at a loss per unit. Furthermore, that price is at par with the other media devices that have far more utilization and in the case of a smartphone, are guaranteed to be in consumers pockets already.
So what is Sony to do? They will continue to put out compelling content to attempt to differentiate it among its competitor's. Looking at the PSP, the biggest of those was Monster Hunter, which is now either exclusive to Nintendo's platform or at least on both platforms. Beyond that, what does Vita offer as a system selling IP along the same lines as Monster Hunter, Mario Kart, Pokemon, Nintendogs, Super Mario Bros, etc which are all 10 or 20 million plus sellers? I can't think of one single IP in ALL of Sony's portable catalog... frankly, not even in Sony's first party home console catalog, except maybe Gran Turismo.
I think Vita will demonstrate a loss in market share for Sony from the PSP on par with what happened between PS2 to PS3. For different reasons mostly. In the end what Sony needs to do is focus on their large phone brand (now exclusively owned by Sony) and their PlayStation brand. The Vita should be left as is and in a year or two they need to promote the merging of these two brands.
The only attempt Sony has had at this so far was the mediocre Experia Play. Mediocre as it was very low powered and even with the beginnings of Sony's Android base store, it was very low supported. However, that doesn't need to be the final push. Had the Vita been slightly smaller with full smartphone capabilities. It would be FAR more desirable to users of all ages.
It would still have the premier game playing capabilities (both its own first party as well as the games in Android itself). It would also have the capability to be that one device people want to carry; a smartphone. Then, you could consider that it won't be losing money per unit. It would be offered through carriers at their contracted rates like any other smartphone. Meaning, $400 to $600 without contract and $200 on contract. A far better pricing strategy that has been proven to work.
Either way, Nintendo is the only company that will maintain or increase its footprint in the mobile gaming market. Its the only one that continuously puts out a hardware/software combination that allows it to remain desirable alongside the rest of the portable device market. Sony is simply competing itself to oblivion.
