I agree with you there too. I don't think the home console space is big enough for 3 major players. If you think of it, it makes very little sense. We have the PS4/XB1 that is practically competing in the exact same market space. Whats funny is that if you just took sony/Ms outta the race and imagine they were 3rd party publishers.... nothing will change. Everything wil go on exactly as it is. Same can be said about nintendo. If nintendo were to become publishers, no one will miss a nintendo console. 

At the end of the day though, at the stage we are in I believe we still need at least 3 players in the console space. If for nothing else to spur competition and certain standards to be set in stone. If not for MS we probably wouldn't have consoles as networked as they are right now. Left to sony we would probably be buying $1000 consoles that can toast bagels. Left with MS we would all probably have to sign into our xboxes with our blood. Left to nintendo we will still be playing on catridges and maybe even still in 2D.

Why was it a bad move to release a successor to the PSP? Sony got over one third of the handheld market (hardware and software each) at their first try... SEGA or any other handheld competitor of Nintendo would have killed for that share at their time. And no market is too small for two competitors.

Perhaps their Vita investment doesn't pay out in the end... but not even trying and leaving the handheld sector only because it is shrinking and has new competition from other mobile devices? And perhaps the Vita investment does pay out in the end, even if they sell much less than their competitor. Most Vita-owners love the system and the Vita probably doesn't "make them bleed money". The production costs of the Vita hardware should have gone down quite a bit the last two years... the SoC and the touchscreen display have many similarities with hundreds of millions iPhones and Android smartphones, the costs of these components should have fallen dramatically. The change from OLED to LCD should have reduced costs even further. The memory cards should be highly profitable and there is no third party alternative of Trancend or Sandisk yet.

• Bad move cause the writing was on the wall. I don't make hardware, I am not a multibillion dollar corp, but even I had the common sense to see that mobile/smartphones and their yearly iterations were making handheld gaming obsolete or niche at best. And I could see that 4 years ago. In 4 years it will get a lot worse.
• The market doesn't just have two players, nintendo and sony are literally competing in a similar space with every single other smartphone on the market. And the ONLY thing the dedicated handhelds have going for it are dedicated buttons. And tehre are even options for those on smartphones. having said that, pound for pound and feature for feature... smartphones are infinitely better than these handhelds on a hardware front, if you can just get around the lack of dedicated buttons in every box.
• that basically means that your market is going to shrink to the size of mobile gamers that care enough about dedicated buttons to warrant carrying an additional device with them or kids. and these days, even kids want a phone or tablet. 
• And no one is saying the vita is not a great all round device. Its just not needed.

having said all that, I strongly believe that they should not have bothered making the vita, rather they should have invested more in their smartphones and tablets. This is what i felt 4 years ago before the vita was even announced, and how I felt when they announced and revealed it. What is going on now with the PSV and ultimately with the 3DS says that I was right thinking what i thought.

And most probably too that i am right thinking that dedicated handhelds are gonna become obsolete. We are more likely to see a nintendo gaming smartphone or tablet  with an ingenious way to put on dedicated buttons before we see a new dedicated handheld. 

Trying is nice and all that, but when billions are at stake, working out of a bubble is tantamount to failure. This is something nintendo is also facing with their wiiU. The PS4/XB1 success suggests that there is a business model that works. Nintendo just probably did the single wrongest thing they could have done. Multibillion dollar companies should have better advisers.  

Meh. If you're a Sony fan, the PS3 and PS4 are better at AAA games and for everything else, the 3DS is good enough. The industry really can't support TWO dedicated handhelds anymore.

Over 8 million customers and counting seem to think otherwise. Even if the handheld market is much smaller than the the market for mobile games and it's shrinking, it won't disappear completely. The market for motorbikes is also much smaller than the market for cars, but nobody is suggesting to ditch the production of motorbikes completely or only let 1 manufacturer produce them.

Sure Sony would be much happier if the Vita sales were as good as the PSP sales the generation before. And Nintendo would be much happier if they could reach DS sales with the 3DS. But if they manage to make a profit with their systems even in a smaller scale, they should be fine and don't have to precipitously end the production of that devices. 

Shame,it had so much potential

apples to oranges. 

It doesn't matter if 8M people have bought the system in the past 2 years. It doesn't even matter if the market disappears or not. No market ever disappears. If sega decided to make a console today, tehre would probably still be at least 10M that would buy it. Business doesn't work that way. What is important is how large of an install base do you need to have a profitabe business or do you need to even make the effort worth while. 

Do you have any idea how many smartphones are sold daily worldwide? or in a month. That is the market that sony and nintendo are competing in when looking at handhelds. And its also showing with the amount of publishers looking to mobile to publish their handheld games. 

And I don't even know why you are arguing with me, what i am saying is already hapenning. Sony is making fewer vitas, stock is dwindling in major retailers as retailers don't even bother replnishing stock cause its sales are too low. There are fewer and fewer excusive handheld IPs from sony or third parties. The vita is being reduced to a companion device for the PS4 and there are rumours of a PS4vita bundle which in truth is just a nifty way to clear out accumulated stock. None of this would be happenning if the vita is making enough money for sony for them to justify support for it. The only reason it could come to this is if you have a device that is not needed.

There are 1B people with smarthphones today. When you think handhelds, that is the market they are up against. And sony also makes phones. so why the hell stil body with handhelds. invest more in your smartphone business. the phone and marketing. put out s studio or tow aside and publish games excusively for the smartphone space. all money in your pocket.

Yes, I know. But not every smartphone user wants to play games on that device and only a fraction of the smartphone / tablet gamers are going to pay more than 5 bucks for a mobile game. And many mobile games profit from real stick and buttons, the accessories for smartphones are still clunky or way overpriced and lack compatibility. Many smartphone users also don't want to drain their batteries while gaming and lose their accessability by phone for the rest of the day... with an additional device they don't have to worry about that.

I too have doubts that we will see another dedicated handheld from Sony but why the hell should they end the production of PSVita devices and shut down the PS-Store on the Vita in the next years if they are profitable and don't "bleed money"? The product is already on the market, what's done is done, R&D costs have been spent.

Sony gets its license fees for every Vita game sold digitally or at retail... if the digital revenue is higher than the maintaining costs of the PS Store it would be dumb to shut it down. If they switch 100% to Android & iOS instead, they would only earn revenue for their first party games (and would have to pay license fees to Apple, Google and Amazon). If they use their own mobile platform "PS Mobile" instead, they can keep the compatible PS Vita in the loop (the Vita-compatibility of the popular Unity-engine should help), so why ditch that hardware? 

Flop

All very good points... 

1. This is true, but its easily rectified. The average smartphone gamer is a casual gamer. Their idea of a game is cut the rope or temple run. They are so in and out that they won't even consider spending money on a game if those expenses weren't somehow hidden from them. But if the only thing that turned a smartphone/tablet into a dedicated gaming mobile platform was some sort of controller add on, then its requiring less of the dedicated handhled gamer to buy a controller for their phone at $30 than to buy and carry an entirely new device that needs it own power source. If there is no other option for mobile games than on smartphones, those willing to pay for games will be there to pay for them too.
2. Accessory design is a moot point, just look at console controllers 30yrs ago. I actually have sketches for a foldable controller that give you all the functionality of a PS3 controller but can be folded to around the size of a cigerret pack. Working my way towards getting it on kickstarter. :)
3. Additional device.... thats the problem.
4. they may be profitable, but only marginally so. And there is so much else that goes into supporting hardware. At the end of the day, $100M spent here to make $120M back is never as good as $100M spent here to make $500M. Thats what makes a shift in focus better.