The Sony excuse of "oh noez, smartphoanz" is pretty funny, and I don't know whether they seriously think this or are just putting up a smoke screen. Smartphones are the reason that the 3DS isn't the DS, since parents can get Nintendogs ripoffs for their kids for $0.99 instead of $40, but it really has nothing on the PSP/PS Vita market directly.
More indirectly, it definitely hurts that some of the PSP's strongest supporters like Capcom, Square-Enix, and Konami would rather make mobile games than ones for dedicated handhelds. But it would seem like Sony should have confirmed that kind of support before launching a device, smartphones or no. Launching the successor to the PSP with no guarantee of Metal Gear, Final Fantasy, or Monster Hunter was just bizarre.
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