Mobile killed handheld gaming, or Switch is successful only because it is handheld?

[Illusion]

You make some interesting points. The Switch Lite really does raise some serious questions about the belief that a dedicated handheld can no longer succeed in a market that is saturated with smartphone gaming. I think the "threat" of smartphone gaming to Nintendo might need to be re-evaluated for the new decade. It was certainly the case in 2014 and 2015 that the 3DS was having its lunch eaten by smartphone gaming. Heck, even Nintendo started releasing a few smartphone games back around that time to placate their shareholders. The 3DS was also selling really well until around the latter part of 2014 when its sales clearly started limping along. Really, the only reason why the 3DS even made it to 75 million was because Nintendo kept it on life support for so long. Most folks on VGChartz would have told you in 2015 that the 3DS wouldn't even make it to 70 million.

Smartphone gaming had the day when it was stealing Nintendo's casual audience who bought the Wii and DS.  That said, this fad has significantly died out and I think that it was a microcosm of the same video game crash that occurred in the 1980's and Nintendo is now once again the beneficiary of that fallout. In the 80's the video game market got saturated with so much garbage that people just completely got turned off gaming. Nintendo then came in with their Official Seal of Quality which assured gamers (and parents) that what they are buying will at least meet a minimum bar for quality and they basically stole the entire market. From what I understand, the same thing might have happened to smartphone gaming with the insane use of microtransations and the general lack of quality of control that became commonplace. This diminishing quality played right into Nintendo's hand and may have created the conditions for the massive swell in popularity that we are seeing for the Switch right now. Nintendo not diving in head first into smartphone gaming like a lot of people were saying Nintendo needed to do 5 years ago might be what actually saved the company. Nintendo had enough foresight to remember the 1980's and what made Nintendo super popular in the first place.