How about both?
Seriously though, there are lots of factors.
- The proprietary memory cards jacking up the price
- Retail games can't be pirated, which would have led to inflated sales by cheapos
- Nintendo liquidating the 3DS price, leaving Vita in the dust
- No mega app to get people to jump aboard
Then here comes mobile which has flooded the market with lots of popular time wasters, so the the dedicated handheld game market had no choice but to see a decline from casual gamers.