The next handheld will be less than the 3DS, but it might still be profitable. I think their next home console won't be a super smash hit, but will improve upon the Wii U's sales

I think it's a tendency. I prefer handhelds, I barely played on my Nexus 7 after getting a Vita. It's usually nice for travelling since I won't take a home console with me. But I know that I'm a niche player and most people prefer to have a smartphone to play. The lack of physical controls (good ones, DS4/Vita level) and the lack of real, console-like games is the main thing pushing me away from phones.

I would like to see Sony trying a new handheld/phone hybrid. Like Xperia Play. I liked what they tried there, but the problem is that they never went full on. It wasn't a "Playstation phone": it was just a Xperia with a joystick. And in the market today, nobody wants a Xperia but everybody wants a PS. They didn't released the games there. In the end, they didn't want to canibalize the Vita market, the Play was weak and in the end both devices should have been one. With their recent tendency of putting Playstation on everything because that's their only valuable brand now (Bravia is weaker than Sammy's TVs, Xperia is weaker than Sammy and Motorola and so on), like with Playstation Vue, I think it's time for them to make a sucessor for Vita that is a smartphone. But not a Xperia Play 2, they need a Playstation phone. Selling on contract, they can retail it for a sweet price even if they pack a solid SoC like Tegra K1.

Sony should release ps now and ps tv on all smart phone devices. No money to be made from handhelds anymore for Sony.

I'm too lazy to add any additional details especially since VGCz is laggy/unreliable on iPhone :p but they'll figure out a way, maybe. Who knows?

There has never in the history of consoles been a console that sold that was weaker than the strongest previous gen console.  The Wii was more powerful than the Xbox.  And I firmly believe the Wii U successor must be more powerful than the PS4 by some margin.  And your proposal ensures that neither the home console nor the handheld unit will be more powerful than either of their most poweful previous gen competition (PS4 and Vita).  Such a console would be a disaster.  People may buy a modest upgrade, but no one buys a downgrade.  Heck, at $199 I don't even know if the thing would be as powerful as the Wii U and 3DS; you're asking for a package deal so each would have to be around $99 and that's bonkers for new hardware.

And with hardware prices falling passing the PS4 in 2017 or 2018 wouldn't even be difficult for Nintendo anyway so why not?  With the law of deminishing returns in full effect, now would be the worst time to bow out of the hardware race.  If they can be 75-100% more powerful than PS4 next gen - which would be easy, BTW - , Sony and MS would have to go a looong ways to get a worthwhile graphical edge over Nintendo.  

3DS successor will have no real opponent and take all handheld gamers for itself. So it should at least be stable, because there is a coregamer base on handhelds that likely wont walk away to smartphones/tablets.

Wii 3 should be up, as long as Nintendo doesn't make a ton of mistakes again. If they show up in 2017/2018 with actually powerful hardware, free online but improved services it could do very well compared to Wii U.

3ds had barely any competition and it still declined big time. The reality is a ton of former ds buyers have gone to phones and tablets 

Yes, but theres still millions of handheld buyers. And they will likely stay with Nintendo. Look at PSP>Vita and DS>3DS. And not everyone wants to play on phones and tablets. So there is a not so big but potentially money spending crowd, that likely will keep playing on the last handheld.

Is a decrease even possible.

That's why I said a decrease for the next DS but can't call the next Wii. It could increase it by selling as little as 20m.