I think by ceding the handheld battle, Sony allows Switch to act as a lever to pry Japanese third party support away.  For example, I'd suggest most Vita developers are more likely to move over to Switch than to PS4.

Products with a very high worldwide base and less demonstrated success on portable systems can hold out on Playstation for a while, maybe Metal Gear Solid is a good example, but for something like Monster Hunter or Dragon Quest, can you afford to skip Switch?

True, but you should never become complacent in this industry just because your device is all the rage. Nintendo learned this the hard way with the Wii. You have to stay on top of industry trends. Japan is a huge gaming market, if you lose them (which Sony is well on the way to doing if they haven't already) that's a huge chunk of the market gone.  They'll dominate the classic home console market as we know it but the industry is always changing.

True, but you should never become complacent in this industry just because your device is all the rage. Nintendo learned this the hard way with the Wii. You have to stay on top of industry trends. Japan is a huge gaming market, if you lose them (which Sony is well on the way to doing if they haven't already) that's a huge chunk of the market gone.  They'll dominate the classic home console market as we know it but the industry is always changing.

The Wii was a fad tho.

As long as Sony stays making proper straight forward consoles, i dont see why they would drop in popularity.

The Playstation brand is not about the next gimmick, all of the Four PS Consoles have been as straight forward as they could be.

The PS Vita (IMO) is leagues beyond the 3DS when it comes to Hardware, sadly it didnt clicked with the audience and Sony abandoned it, focusing on what it works for them.

And the industry 30 years ago said gaming was a fad in the largest gaming market at that time, the US. Even with the DS Nintendo had to learn the hard way. Was the DS a fad too? No, it was subject to new forces in the industry. All I'm saying is, being straightforward consoles without any real innovation can help or hurt a company. Right now it's helping, sure. But we don't know what's going to be the norm another 30 years from now. Could be a PS10 that just has more horse power, could be PS Mind Toy. I feel that Sony is just playing it too safe in this regard.

The innovation lies within the games, not the console. 50 years ago scientists were saying that smoking was good for your health and didnt harm the baby in pregnant woman. Who cares about what people were saying 30 years ago? We are in the cusp of console technology. Every posibility that is ahead of what we have now cannot be done in the short term. VR is in its infancy, and controlling a videogame with the mind is just without reach in our lifetime, i wouldnt bother about it.

I think as mobile chips like the Tegra continue to evolve, handheld gaming will meet console gaming at a standoff and whoever spent more time in that area will reap the rewards. There's going to come a time where consoles and handhelds will be evenly matched but one of these devices, you can take anywhere. Sure there's always going to be a market for those who are fine with no change, but if I were Sony I'd be investing heavily in mobile content (which they really aren't as Serkan Toto pointed out they have one mobile game and it's a flop) and I'd be investing in dedicated mobile gaming with HD out. But that's kind of difficult right now for them as the leader in this tech, Nvidia has struck a multidecade deal with Nintendo and their chips are only going to get closer and closer to parity with current gen consoles. They can do their own deal with AMD but after this news I doubt it. 

Im not tech savy, ill pass on this one. People here can give their opinion in regards of Home Console vs Handheld Console when it comes to power. From what ive seen, they have never been equal. The handheld is always less powerful.

As a Sony and Nintendo fan I feel Sony isn't future proofing themselves and Nintendo is as strange and impossible as it sounds. PSVR is their only forward thinking move at this point. All I'm saying is, the tech industry is moving too fast for PS to not pay attention to devices like the Switch or put their hat in the ring. Can you imagine a world where Nintendo never pursued handheld gaming after the Gameboy if the Gamegear killed it in sales? Nintendo would be miserable as a console only maker. But these are all what ifs, I understand the argument that Sony should focus on what works for them but I hope Sony is paying attention. Sony's issue right now is that they see Switch as only a handheld when indeed it's a hybrid device so they don't feel the need to retaliate. I think they'll choose a different tone when the Switch's generation is over.

LMAO, you are talking about the Switch like it is some kind of tech that were given to is by Aliens. It is a Handheld that can be connected to the TV, nothing more, nothing less. Which BTW has been done before, without success but still. Sony's tone will be the same after the Switch, a well made, capable console with the best 3rd party support and one of the best studios.

Why does it have to be one or the other? Japanese developers have been stupid in the past, that doesn't mean they have to continue being stupid though. Western developers realised a long time ago that games should be multiplat by default, it's about time Japanese ones learned that too.