I don't know that the mobile market is devouring the handheld market but the largest publishers and developers of hanfdheld games all have multiple mobile projects in progress today. My hypothesis is that less development attention is what is "killing" the dedicated handheld market. All of those mobile projects would have been DS or GBA games at that time. Western devs were never really big on handhelds and they have switched over to mobile platforms almost completly. That software gap we will call it would be why we don't see portables doing as strongly right now. I think what we really need to do is look at the number of titles the 3DS has recieved overall and compare that with the DS and GBA in the same time frame. If I had the data I would bet money that the title number contraction is very severe and leading to this "decline".
If that hypothesis holds true it really seems like the issue is getting the same amount of development attention that older platforms got because there were no other choices for those size projects before. If software does indeed sell hardware then I think my analysis makes some sense. These handhelds can't attain critical mass cause they don't have enough software. I think we know where the software went. Without western titles like GTA PSV never stood a chance at geting PSP numbers. With less support from the major eastern publishers the 3DS didn't really have a chance to out do the DS. The real question is how can handhelds attract that much development attention when there are other more appealing places to put those small projects. When we can answer that question we can see portables "saved"
