There are many reasons. One is prioritisation and resources: After the original Gameboy took off a second time thanks to Pokémon, Nintendo made the GBA their priority because of low Gamecube sales. Their handhelds have been their priority ever since. Thus, resource allocation: Whenever Nintendo didn't have enough resources for both devices they prioritised their handhelds - which was logical, as handheld games were cheaper and faster to make. When the 3DS bombed at first they poured resources from Wii U to 3DS and saved the 3DS with price cuts while letting the Wii U die. And just in general, handhelds got more games because they were quicker to produce and could get quick ports of prior console releases, as well.
I would say lack of competition but Nintendo actually had some competition in the form of Sega handhelds in the 90s and the Wonder Swan in Japan (and mobile phones like the N-Gage). They just never had competition from Sony for a long time. Also, a year ago many people predicted the Switch would fail because of competition from Smartphones.
And then there's games: Nintendo is a company with arcade gaming roots and their systems do best when they produce games with an arcade-vibe for them: Think Super Mario Bros. and recently ARMS, Splatoon and even Breath of the Wild that just puts you into an open world and lets you die often. Nintendo always produced arcade-like games and games which are quick to pick up and play for their handhelds but they often tried to develop more "hardcore" / sophisticated experiences for their home consoles and that often failed.
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