Because the competition has always forgotten some of the cardinal rules of mobile gaming, like battery life, cost, sturdyness, and games that came be played in short whiles.
The PSP is a great piece of technology, but its design has all kinds of problems. The cover for the memory stick is flimsy, the UMD drive is a terrible idea: Drains battery, is noisy, and doesn't have a memory density advantage over flash memory. The screen is the hardest thing to keep clean since the GBA, and it's made worse by how easy it is to put a finger on it while changing UMDs. The analog knob is terrible. The shoulder buttons don't have a good feel. and all of this is just as bad in the Lite version.
So all that Nintendo has done is to avoid shooting themselves in the foot.
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