Either way the 3DS is sitting at 19 million units sold. Theres obviously still a market out there though I do agree that market is narrowing.
Vita is just in very real danger of being left to die while 3DS isnt even close. In fact its doing pretty damn good.
The way I sorta look at it is with the rise of smartphones, there was basically one seat left for one of the game companies, and Nintendo hauled ass to make they got to it first.
The market for the game-only handheld was shrinking as is, it can't support two seperate platforms, it was going to be one or the other.