They dropped it down pretty rapidly due to the poor sales. Taking into account inflation they're not that far apart after the first price drop and the difference is rather large between the two.

Yup, it's $169.99 (3DS) vs. $125 (GBA) with inflation taken into account, 3DS was only $249.99 for like 4 months before Nintendo hit the panic button. 

I can see them holding out for kids whose parents do not want to buy them a phone yet, but otherwise. I don't see dedicated game devices surviving other than a niche market.

Was just around some kids, and they would rather play games on their phones and tablets than their 3DS's. They had both.

I got laughed at, but I still think Nintendo should make a phone included 3DS. Why would someone want to carry two similar devices in their pocket? (Phone and portable gaming) When you could have one that does both.

Being able to sell 75-80M handheld devices per generation is enough to warrant another handheld. The market is dramatically smaller, but Nintendo definetly won't overlook these 75 million people who still want handhelds though.

I'm sure Sony was thinking the same thing coming into this generation, lol. 

Of course there will be another Nintendo portable, likely a hybrid type platform and its probably been long since fast tracked for a 2015 launch.

That said it seems to me like Nintendo is losing the enthusiasm war here, even to kids that they may have managed to convince to get a 3DS in say 2012 ... I think many of them they are losing to smartphones/tablets every day. 

The dedicated handheld market isn't dead, it has decreased for a few factors.

The 3DS/Vita don't offer anything a smart device can't + to a casual they just look like upgrades, not the next "big" thing. What sold the DS was the innovation, and just strange concept of a 2 screened game system. The PSP at its release looked amazing graphically and had tons of features that most phones wouldnt be able to do for years.
The 3DS isn't innovative because it hasn't shown the public anything new like the DS did at the time. The Vita still looks nice, but people aren't willing to pay that price for a handheld and the memory card prices absolutely kill it (its internet browser isn't that great either, plus lack of apps make it unappealing to the general public).

I believe that people have less of a reason to own a dedicated handheld device at the moment, because while the software may be good if the price of what is required to play it isnt justified, no one will buy it. I'm very confident that Nintendo will be making another handheld (not too sure about Sony), but if they continue the DS/PSP line, they will receive less sales because the market is tired of those lines :P

WATCH THE BIG DIFFERENCES

3ds sold 4.5m in the first six months at 250$, pricecut to 170 and stood ther

GBA launched at 130 and was pricecut to 99 later

The Handheld market is shrinking, but not near collapse like the OP tries to prove. The 3DS is doing well despite the overtaking of free & $0.99 phone/tablet games.

"Well" is a relative term. Nintendo hasn't sold handhelds at this pace since before the GBA, in the 1990s.

If the console business was trending similarily to this, people would be having heart attacks on this board, lol. 

It also illustrates why Nintendo is having so much trouble making a profit (operating profit) these days. The Wii U losses are there sure, but Nintendo doesn't even sell many of those to begin with, a healthy handheld platform would allow them to profit, but the 3DS isn't pulling its weight either. Bad situation all around. 

the DS was a monster though and the PSP at 80m was impressive in the end,with all the pads/pods and phones now who needs "dedicated" consoles which is being proved i guess,back to the niche and gaming for us,we will survive but surely the future because tech will improve so much is that nintendo will partner some pad/phone maker and sell gazillions one day