Sony Explains why PSV has come up short

[domflo]

The smartphone market hurts the dedicated handheld market, yes, but 3DS shows that both markets can coexist. 3DS will probably end up somewhere around GBA/PSP numbers. Basically we'll be reverting from the ridiculously large market of DS/PSP (DS appealing to people that would have never buyed a dedicated handheld before (e.g. my parents/grandparents, who have moved on to smartphones and tablets) and PSP appealing to people that want all sorts of entertainment on to go as opposed to just playing games) to the more normal GBA times.
The way I see it, almost nobody buys a smartphone because it plays cool games. They buy them for their multimedia features and to communicate with other people. And while they're at it, why not play some games on the phone.
My parents, for example, never really played videogames (aside from a couple rounds of Mario Kart with me and my brother or some Brain Age on the DS). They do on their smartphones, but only because there are games available for free anyway. It's just a side effect of owning a phone. See, I own an android smartphone and I also own some games for it, but I'd never pay for any game on that thing nor do I play all that much. From my experience, that's how it's for most people.
We only see a shrinking handheld market right now because last generation had a huge appeal on people that would have never thought about buying a gaming handheld. My parents would have never bought a GBA for themselves, or a GameBoy, or a SNK Neo Geo Pocket or what have you. We only feel that people like these have been lost by the handheld market because they were attracted by it last gen. Were the jump from Gen 6 to right now, we wouldn't even talk about smartphones influencing the dedicated handheld market.

That said, Sony could have easily pushed the Vita to numbers of around 30-40 million units sold would they have handled it correctly. Yes, compared to the PSP, Vita has a much harder time, but that doesn't justify the horrid sales up until now.