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As it is highly glossed over, smartphones is the reason. Smartphones have small sales in Japan, 3DS has high sales in Japan. Smartphones have large sales every else in the world, 3DS has small sales everywhere else in the world. The 3DS will be fine because it is a christmas gift (sales will increase significantly during the holidays), but with that said, 3DS won't be fine when itunes gift cards become the "christmas gift". Sony and Nintendo have a lot of troubles in the 5 years for their portables, let's just hope Sony figures out how to merry 30 dollar handheld games with cellphones (Or Nintendo, but I don't see them developing a phone arm).