Because people don't want two big electronic devices in their pockets. The smartphone has more features and cheaper games, so it's an obvious choice for the average consumer.

And the most popular games released for the 3DS at the moment are basically just home console games with less content. People simply don't need to buy the console; They have already played Star Fox and Ocarina of Time, Mario Kart 7 is a lacking experience (well, in my opinion) and Super Mario Galaxy is superior to 3D Land. Sure, all those games are great, but they can all be overlooked until games like Pokémon arrives.

Because we've had no big games for over 6 months, and about two notable games period since February. I love my 3DS, but considering the lack of support for the system, it's easy to see why it doesn't sell loads.

And you know what? I'm not going to blame Nintendo for this one. Sure, they could be better, but they've developed Kid Icarus: Uprising and Mario Tennis: Open and published M&S at the London Olympics and Spirit Camera. That's four games in six months. That's not great, but is enough.

What exactly have we gotten from third parties on the 3DS this year? I already mentioned Mario & Sonic. Then we have Resident Evil: Revelations, a big game from Capcom. We also have a couple of PS2 ports.

That's it really. There have been other big games, like Dragon Quest Monsters 3D, Kingdom Hearts 3D, Harvest Moon, and Theatrhythm, but none of them are West yet.

The good news is, this wave of 3rd party support from Japan should be headed Westward soon, and accompanied by the almost afterthought that is Western support: Epic Mickey, Heroes of Ruin, and multiplat titles like LEGO games, Skylanders, and Scribblenauts. Combined with Nintendo's offerings, including NSMB2, Paper Mario: SS, Luigi's Mansion: Dark Moon, and, to an extent, Pokemon Black/White 2, and the 3DS should have its act together by, say, August and through December.

Seems to be selling fine do you mean why isn't the 3ds the top selling weekly in the west.

Because who want's to upgrade when you got this?

These are the 3DS titles (including Pokemon) confirmed for a 2012 release in North America. Note: This is not a complete list, so excuse me if I forget anything.

New Super Mario Bros 2.
Castlevania: Mirror of Fate
Scribblenauts: Unlimited
Lego City: Undercover
Luigi's Manison: Dark Moon
Paper Mario: Sticker Star
Skylanders Giants
Kingdom Hearts 3D
Heroes of Ruin
Theatrhythm: Final Fantasy
Epic Mickey: Power of Illusion
Brain Age: Onitore
Art Academy 3D
Professor Layton and the Mask of Miracle
Sonic & Sega All Stars Racing Transformed
Pokemon Black 2 & White 2
LEGO The Lord of the Rings

I'm only listing the ones I believe have a good chance of selling well. Not to mention 3DS XL is launching with a Mario game!

Other titles

Code of Princess
Adventure Time: Hey Ice King! Why'd you steal our garbage?!
Rayman Origins (North America release in November, XL could do the game some good)
Rhythm Theif
Zero Escape: Virtue's Last Reward (could surprise)

I think it's because these awesome list of games haven't arrived yet! There not as large or as recently released as Japan's, but there are a few sellers in here.

Hopefully a few more Nintendo Directs will do us some good for the holidays.

As it is highly glossed over, smartphones is the reason. Smartphones have small sales in Japan, 3DS has high sales in Japan. Smartphones have large sales every else in the world, 3DS has small sales everywhere else in the world. The 3DS will be fine because it is a christmas gift (sales will increase significantly during the holidays), but with that said, 3DS won't be fine when itunes gift cards become the "christmas gift". Sony and Nintendo have a lot of troubles in the 5 years for their portables, let's just hope Sony figures out how to merry 30 dollar handheld games with cellphones (Or Nintendo, but I don't see them developing a phone arm).

The gameboy color version of that is actually on sale on the eshop.

Anyways i hear smartphones and tablets reduced the handheld market by 1/4 to 1/3.

Japan is a market with different characteristics. So, while handhelds do better than in the west, home consoles do considerably worse.

In terms of software sales, this shouldnt make a huge impact as mainstreams dont usually buy many games. Either way, if there are some games that make enough of an impact the sales will rise. The fact is people love some classic mario games, and you can only find them in nintendo consoles. Sony doesnt have that handicap.

Games!!! Japan has had constant release of 3DS games. Even in the holidays it got an extra game in MH3G than the west. It also got Inazuma, DQM, Hatsune Miku, Fire Emblem, Kingdom Hearts, FF Rhytm and more 100k+ sellers in Japan. So far in 2012 it has had the best lineup in Japan without trying too hard.

However, in the west that's really not the case yet. I'm sure come August that might change with NSMB2, but even that won't be enough. There has to be a constant stream of games, and for some reason it's just not happening right now. The holidays will help to serve the 3DS this time, but it really needs support, especially from Nintendo.

Because it's not the XL.

I didn't get it because the battery didn't impress me, and the 3D didn't impress me enough to get it. I think the XL will have a much more impressive 3D effect.