They should be. Getting fucked over by the greatest handheld ever and then getting re-fucked over by another strong handheld would have hurt.
They may be able to survive in the console market but they would have been absolutely raped in the handheld market in my opinion.
Not only would they not appeal to the handheld crowd as Nintendo has they would also have been less likely to make a multimedia device like Sony has. I actually think that if they had tried they would have essentially made a PSP (basically a last generation console turned portable) without the things that make the PSP attractive (multimedia, homebrew, emulation).
This guy is pretty much spot on "Our content assets don't naturally lend themselves to driving success in that particular market."
