In 2005, the PSP was mindblowing in delivering near-console level graphics on a handheld.
In 2012, there are too many near-console level graphics devices out there. The 3DS delivers an experience that is different and cheaper than Vita or smartphones.
In addition, just like the Wii U/Wii, I think there are some identity issues as to the average person I think the Vita looks too similar to the PSP and doesn't obviously provide something new.
I'm not sure that even price cuts could help it.







