It's almost as if you just ignored very key points of what I said.
The price cut was due to low post-launch sales as they had a very poorly planned software lineup through most of 2011. There was a grand total of 1 game released between April-October that sold over 1 million units.
They cut the price in August, the big games I mentioned released in Nov/Dec, they clearly didnt want to endure 3 more months of poor sales while waiting for the big games to drop.
This should give a little perspective, 3DS sold over 3.4 million units in the 5 months it was sold at $250. Vita' sold under 3.7 million in it's best year.
Even before the price cut 3DS was on track to sell something like ~10 million in 2011, something that took Vita nearly 3 years to achieve.
I ignored nothing. If Nintendo wanted to boost sales until those games came out, like you said, they would have just dropped the price by ~$20-$30, and probably just temporarily. They dropped it by $80 permanently. Just months after launch. That's unprecedented, especially for a system that you seem to claim would have been the de facto market leader. Obviously, Nintendo didn't share that confidence. That was not a move just to boost sales for a couple of months until great games came out. It was a move of desperation to put it in a much better position against the upcoming Vita. And bringing up Vita's sales doesn't change that. The market shrank, as we came to learn, to a point where there was only room for one of them. Nintendo made sure they were that one by dropping the price.
It's as simple as Nintendo having made a forecast of 15m in 3DS shipments that they were aiming to meet. They still fell short of that goal despite the big price cut.
Your hypothesis that a shrinking market left room for only one successful portable console doesn't have any merit. It would make sense if both the 3DS and Vita were well executed systems, but both had very flawed executions and that's the main reason for the shrinking market. There wasn't good handheld hardware to choose from in the eighth generation, so a lot of previous handheld owners just said screw it.
There are still people who believe that smartphones were the main reason for a shrinking handheld market, but that doesn't make any sense when the country where mobile gaming is the strongest (Japan) also happened to be the one where the decline of handheld sales was the softest, both in absolute numbers and proportionally to market size. Additionally, at the tail end of the eighth generation we saw how smartphones helped to boost the 3DS business significantly, so smartphones and consoles aren't really competing devices.
The causes for the decline of the handheld market lie mostly within Nintendo and Sony themselves.
3D proved to be a liability for 3DS sales throughout the entire generation, plus Nintendo didn't manage to create any new hit IPs on the 3DS; not surprising when they didn't make many attempts at creating new IPs to being with. That's very different to the DS where new IPs were among the major sales drivers, contributing a lot of the growth that the seventh generation saw over the sixth.
The Vita was plain awful. High price coupled with expensive mandatory and proprietary memory cards. Severe lack of signature titles. Internally declared as dead by Sony within a year and it quickly showed externally how limited the Vita's software lineup was going to be.
The most important factor following the above was the misbelief of third parties that smartphones and portable consoles are basically the same thing. As a result, a variety of IPs was moved to smartphones which impacted consoles negatively. But it turned out that it's not realistic to sell games on smartphones, so third parties from AAA publishers to small indie developers began to reconsider. So in a sense smartphones did play a role in the decline, but not because they achieved anything, but because of the stupidity of third parties who made big bets on the wrong horse because they don't understand gaming.