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I don't think the price of the hardware is the problem. I think that the price of the mandatory Memory Cards and the games is the real problem. The 3DS suffers the same problem with the price of the software.

I don't think "Core" gamers have a Problem paying $40 dollars for Gravity Rush, Resident Evil Revelations or Mario Kart 7. But on Amazon forums I have heard time and time again parents talking about buying a "cheap tablet" to buy "cheap games" for their kids, and that one of the cons of the 3DS is the expensive software.

We can say "yes, but those games are crap compared to the games of the PSV and the 3DS" and I agree. But with those $40 a parent can buy at least 20 games on the Android Market or App Store and keep their kids entertained for a long time. I think the price of the software of the dedicated portable gaming systems needs to be revised if they want to survive.