There isn't really any downside for Sony to do this.
If they can score a supplier deal with Nintendo in the process (ie: to supply the LCD or other components), they would do it on that basis alone IMO.
But there are other benefits from Sony's POV. Nintendo handhelds attract the youth audience, so having their games on a Nintendo handheld can introduce kids to many of Sony's IP before they can maybe afford that $400 PS4.
They're not competing with Nintendo anymore, so why not.







