Portable gaming has moved mostly to phone and tablet devices. The market for portables hasn't shrunk any, it has probably grown since the 7th generation, as it had been growing with the GB and GBA. Now it has simply moved to smaller devices with more utility than a 3DS or Vita could ever hope to have. And I don't know if Nintendo will really do anything about changing that next gen.
I still prefer playing the style of game I can get on the 3DS, but I have to honestly admit, outside of the hours one can spend waiting in airports/planes I rarely play it outside the house. So honestly I just play it because it has games I like rather than because it's portable. I mean, it is nice to be able to play my 3DS on any chair or bed in my home but that's about all the mobility it gets.
I did just take it to Indiecade, though, so that's something.
