Japan is the only market where portables are still selling decent numbers. Outside glorious Nippon, even 3DS is barely selling any better than the dying Wii U, and Vita is a lost cause.
The core audience for portables is children, and nowadays they just game on Mum and Dad's tablet/smartphone. As for adults, in an era where everybody carries around a device capable of playing games 24/7, people are increasingly unwilling to spend hundreds of dollars on a separate device just to play certain games. Mobile gaming has ripped the heart out of the portable industry. They're destined to go the way of PDAs and movie rental stores.
Japan-21 million hardware, 102 million software
Americas-19.5 million hardware, 87 million software
Other-17.5 million hardware, 75 million software
Sales really aren't that different between region. I'm pretty sure millions of people still rent movies via Redbox, the market didn't die, it adapted which is what Nintendo needs to do. Nintendo doesnt need to beat smartphones/tablets, they simply need to find a way to coexist.
Kids/casuals want whatever is considered the new, cool, hip item and if Nintendo can release a device that is seen as cool than it will attract these consumers. Easier said that done but not impossible.
When the herd loses its way, the shepard must kill the bull that leads them astray.