Say that to the 3ds vs GBA and especially DS :)

Eventually there shall not be HH Software.

Just because Pokemon will get a near 1:1 attach ratio does not mean that it will sustain a business supporting that said platform when hardware sales are also needed to meet a quota ...

If this ever comes to reality though ... I think the dedicated handheld is pretty much toast outside of maybe Japan:

What is that? It's a recent patent that Apple was granted for a pop-up home button that can become a joystick. 

While you still don't have buttons, the addition of a physical directional input would be a huge game changer for smartphone games. Genres like racing games, platformers, action shooters, etc. would suddenly become far more playable on the standard smartphone. 

In other words ... traditional handhelds would be doomed IMO. The only differeniator left would be the X/Y/B/A buttons and quite frankly I don't think there's enough people that care about that, when playing handheld games people just want something cheap, easy to play, and eats up 15-45 minutes of down time in a snap. 

Never said that, but this is where im getting at. if the next HH released with a new gen of pokemon (HH being $180-$200) and followed up by 2-3 games in 1 year, it would of sold 15mil guaranteed lifetime.

All im saying is i dont see nintendo HHs ever doing under 25mil lifetime. They (future HHs) can do 30mil each and SW sales will still be pretty big for many games. Look at pre pokemon announcement (jan 2013). 3DS was over 26mil shipped with software sales being healthy for many games.

Only idiots and those that don't pay attention to Japan's gaming trends think handhelds don't have a future. Major western publishers have abandoned them but most Nintendo, Indie and Japanese developers know that there is a market for them with the right product.

Why is PS4 the best selling dedicated game platform then? 

Why is smartphone gaming growing leaps and bounds past dedicated game handhelds, despite having (generally speaking) lower quality software?

It isn't that simple and hasn't been for a long time. 

What you fail to consider is the possibility (I would say reality at this point) that the demographic that desires handhelds has not shrunk, but rather the seventh gen was an anomalous meeting of multiple demographics.

Let me explain it metaphorically.  Say I created an orange peeling machine that's ssuper efficient and all the orange lovers out there buy it up like candy.  I see this and continue to create improved iterations of my orange peeling machine, with each selling roughly the same amount.  Then, a large group of potato lovers learn that my newest orange peeler is also pretty good at quickly peeling potatoes.  Suddenly, my sales double as potato lovers start buying my orange peelers in mass.  But then another company that was already making simpler vegetable peeling devices creates one that peels potatoes just as good as mine but is much cheaper since it doesn't have to deal with the difficulties of orange peeling.  Suddenly, my sales drop sharply with my next model down to roughly the same numbers as before the potato peelers showed up.  But has my market shrunk?  The answer is yes and no.  The people willing to buy my device has shrunk, but the target market has not.  What happened was that a neighboring demographic interested only in specific aspects of my device rather than the device's full of core feature set had migrated over to my market.  But once a device that filled their needs more easily came along, they had no reason to stay.  But those interested in the core feature set are still there, meaning my target audience is roughly the same as always.

This is what happened last gen with dedicated gaming devices, especially handhelds.  You had a lot of people buy them who were only interested in a part of the handheld experience, a group interested in a much more limited form of gratification than the actual handheld demographic.  Handhelds happened to provide what people wanted at the time, but they were never the demographic interested in buying dedicated handhelds seriously, they were interested in specific, limited uses they would get from them.  As such, once smart phones became as ubiquitous as they are now, there was a cheaper means to get the gratification that they wanted.  Yeah mobile gaming lacks a lot of the benefits of dedicated devices, but that group never cared about that.  And now that those metaphorical potato lovers have moved on, the metaphorical orange lovers remain.  They are just split between two devices instead of one with the GBA.  But the numbers are headed for GBA territory when combined, which supports my claim.  The 3DS will likely land at 60-65mil (or higher), Vita is headed for 12-15mil.  This puts the handheld market at 72-80+mil.  When you account for the slow starts of both devices and early marketing fumbles, that's about right if the demographic size is similer to GBA and prior (the GB got higher, but only due to a very long life span and the jump to color).  

In other words, the number of people interested in handhelds specifically is stable.  The number buying has gone down, but that's due to the migration of a neighboring demographic that was only interested in handhelds for certain limited uses, not the handheld package itself.  Nintendo's next handheld will likely to around GBA numbers since we all know Sony is leaving the handheld market and it will be Nintendo alone all over again.

It's actually shrunk considerably from the GBA era even. 

Nintendo shipped 13 million handhelds last fiscal year and are aiming to maybe get to 9.5 million-ish this fiscal year. 

These are their lowest handheld shipments since 1996 or so, that's before the launch of Pokemon in the West. 

They haven't had handheld sales this low in almost 20 years in other words. GBA's 80 million LTD is misleading, it likely would've sold well past 100 million had it been given a proper lifecycle and was consistently crushing 18-20+ million a year. 

Sony isn't just attracting "a audience". They are attracting basically the entire modern console market. In other words they are attracting "the audience". 

The PS3 from top to bottom had a higher quality library than any Nintendo system since the SNES, so I don't think that really follows. There's a lot of good games on the PS3. 

Games are the no.1 downloaded app for smartphones. And many people are choosing to play on their smartphones and forgoing dedicated handhelds entirely. 

Software doesn't really sell hardware in the direct sense, because every system has an abundance of good games these days (or will have them in time). So that's no longer the main artibter. 

It's not like the 90s anymore where you could look at the Super NES vs. say the Atari Jaguar or 3DO and clearly, the SNES had far better games (in quantity, diversity, and quality). 

Nowadays, everyone has some pretty great games. Sony does, MS does, Nintendo does, even on smartphone there are some good games. Quality isn't the only factor anymore. There's more good games on most any major platform than most average people have time to play.