OP: You're right but both are clearly to blame, you cannot ignore the shrinking of the market. Even if Sony played their cards perfectly with Vita exclusive like Final Fantasy, GTA, God of War, Kingdom Hearts, GT, Elderscrolls etc the roof for the systems success would have been lowered significantly as handheld games are no longer much of a relevant platform for the casual uninformed gamer.
I think the 3DS is operating close to its potential, add an extra 10m if it had a more impressive launch year, Meanwhile I feel the PSVita fullest potential would have been around 40m in sales.
Part of the problem with sony is that their software has never really been responsible for shifting their systems, especially not on handhelds. All of the big third parties that helped make the PSP a success, abandoned the Vita before it was even out.
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