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3DS is down for several reasons.
3rd party support in the West is pretty limited;
The console is already in it's 4th year in the market - software is bound to dry out.
Being so late in it's life cycle, just like any other Nintendo platform, it will see even less Nintendo games as the years go by. And like other said, Nintendo no longer can focus on 2 platforms at once. All was cool until last gen, now, things are different.

Also, the mobile market has already eaten part of it's future sales - or expected future sales.