People don't want a standalone gaming handheld in the West anymore. Mario and other Nintendo IP are keeping the 3DS afloat, Sony doesn't have that. Handheld market is going back to being primarily a kids market, older teenagers and adults are all about smartphones and tablets.
People also want a real upgrade from the PS3/360. These are 6-7 year old consoles, they don't want to pay $300+ just to get more of the same. This is Nintendo's big mistake in thinking that the "old tech + new controller" philosophy would work for them again. That strategy only works if your controller is an unbelievable home run idea.
Sony and MS should take note from the struggling Wii U -- if the PS4/720 are not large leaps over the PS3/360, they will be shunned, because why bother upgrading if your PS3/360 is similar? People are going to save their money and spend it on other attractive home electronics like a smartphone or tablet and just continue to game on their existing HD consoles or maybe even just lose interest in gaming period.
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