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I disagree. The Vita doesn't need to be killed. It needs to have better games. The games need to cost more. Sony needs to have a model with internal storage. If anything needs to be killed, it's those damned proprietary memory cards.
Release PS3 games simultaneously on the Vita but make them cost half as much - say $30.
The Vita like consoles has its place and the market for that is not going away (yet). Nintendo managed to turn the 3DS around, Sony can too with the Vita.
I have a lot of love for sony, they have been great for a long time but this might kill them. Their sales are incredibly depressed their products completely without demand. To top it all off the 3rd tech bubble in history has burst,
Can Sony last?
I disagree with multiple parts of your statement. Nintendo hasn't "turned the 3DS around" -- not if we compare it to the DS. It's true that they've managed to get things rolling, but they did that by slashing prices and stepping up development of other services.
Managing to turn a narrow profit on a device like the 3DS isn't a good sign for the rest of the industry. Nintendo, meanwhile, has only recently dipped into the red. Sony has been mired for years. I want to stress that if I were going to buy a handheld, I'd want a smartphone *and* a Vita or 3DS, because I prefer specialized devices. Hardware-wise, the Vita looks great.
But if Nintendo can only barely build a profitable device, Sony's chances are miniscule. Higher levels of integration might be a way to keep the device relevant for current owners, but they don't have enough momentum to drive further sales, and they aren't in a position to be making big bets on niche products.
I hold the belief that handheld gamers were more of the casual type, and with the rise of quality mobile games it's not a surprise that there would be a decline in sales of dedicated gaming-only handheld devices.
With tablet sales soaring dedicated mobile gaming devices don't have an exclusive market anymore. Already the vita was trying to be more than a gaming device by supporting video and audio playback as well as having the ability to go on the interwebs. Tablets can do all those things better and with developers concentrating more on phone and tablet games the handheld gaming system is dying because of reduced support and therefore reduced interest. Kill the vita and integrate ps games onto the sony tablet and turn a loss leader into a source of profit.
Joel H and Karanm both have excellent points Joel for naming the problem and the proposed solution of Karanm however i feel that sony feels like they would murder the games they have for the Vita by transferring them to the ill equipped sony tablet.
Maybe sony ought to stop trying to be such a large producer and just content itself to be a niche competitor and then if they strike on a fantastic idea use it for an explosion of profits and then downsizing again to keep the company agile, and competitive. Sony has reached their level of incompetency.
Hey guys, remember when PC gaming killed consoles? No? Well I guess you have no reason to say phone gaming will kill handhelds. The two markets can co-exist.