Dedicated gaming hardware is dead. PS4 and XBO are not dedicated gaming devices. They are massivly multipurpose devices, that also happen to game. That is the whole reason behind their success. If Niether of those devices had Video, Music, and Photo services, a web browser, and a Blu-ray player, the sales would be terrible.

So, if Sony brings another mobile gaming device to the market, it can not be a dedicated gaming device. It has to have the ability to double as an entertainment and communication device as well. People simpily will not buy a device that is so limited in scope no matter how amazing the library is.

With that said, Yes, cellphones are the future, but extreamly limited slab phones will not remain the only option tell the end of time. Eventually, the mobile market will have to move on from the unimaginitve, uninnovative state it has been in for the last 5 years. At that time, an Xbox and PlayStation Phone built in the form factor of the PS Vita will do amazing sales, and finally give the mobile world something interesting to talk about.

I don't think it would make a difference to be honest..

Just give it up already. Let it go. Let it die in dignity... or whatever.

I agree. Vita has served its time. It is going on six, which by any standard is quite an old device. Sony absolutly has to change up its mobile game though, and merging Sony Mobile into Sony Interactive, and releasing a new PlayStation line of mobile devices, is the only option they have that stands any chance of gaining ground in the market. Xperia is even more dead than Vita.

It's the best the console for waifu games.

If they developed some new first party games and had a new model they call PSP2, i'm sure it would do better.

With far better support and marketing, updated, but not too expensive, HW and display and 100% BC it could extend PSV life and sales up to decent numbers, MAYBE.
Mobiles stole the casual gaming, but anything more than casual sucks on them from mildly to horribly, so there's still a market for portables, but it's a lot smaller than in glorious DS and PSP times.
So 100% BC would be of the essence for PSV2, as without it it would do even worse than PSV.
I wouldn't excpect anything more than decent overall PSV+PSV2 sales anyway, as the last decently big chance for portables was for 3DS and PSV, and while Ninty fixed its initial mistakes quick enough, Sony wasted its chance.
Switch will obviously get the lion's share of an eeven smaller market next portable gen, adding a chunk of home users too, so Sony will have little space for PSV2, as it already has a winner, PS4, for home consoles market and it won't damage it with internal competition, so at best PSV2 would just benefit with better integration with PS4 and better "portable games on TV" functions, but it won't be a true hybrid like Switch.
That big MAYBE though could be enough for Sony to give up, but I wouldn't exclude a less ambitious PSV 1.5 (better HW specs, with upscaled graphics and totally optional better settings for new games, like a PS4 Pro, but not a new platform by any means) and some marketing and support effort better than now, but with costs strictly kept under control.