see colon said:a couple of things to note...How many of those have 300 bucks to spend on a portable? How many of those will be getting the DS instead?
nintendo has, since the n64, had a very competative price for it's hardware (by this i mean usualy less, or being first to drop the price). yet, both n64 and NGC have been trounced in hardware sales by sony. don't underestimate sony's marketing power. people tend to FIND the money for a sony console, and pick up the nintendo console when they HAVE the money for it.
wich brings me to point 2. i'm pretty confident that this will be a 2 horse race, and i forsee people picking up both systems eventualy, if each hardware actualy gets some exciting software.
also, PSP should have a lower per game price than DS (or gba, from what i've heard). that's an important marketing point and i don't see sony missing the chance to trumpet that when the time comes.
The demise of the n64 was more self-inflicted than Sony marketing driven: carts vs CDs, bad 3rd party treatment vs Sony red carpet, etc.
The question here for the PSP is whether it can expand the current portable market. Clearly because 70% of the portable market is under 18, only a fraction of that will have the disposable income or parental leverage to get a $300 dollar portable. So Sony has to (1) take over 18 market from Nintendo, and (2) expand the number of people over 18 who play portables. I think that they stand to a chance to do a little of both (1) and (2) but I don't think they have a chance to do enough of either to build a customer base that will buy enough games to support game development.
With the low tie in ratio of the portable world, you need a larger installed base as compared to consoles to have a self-sufficient market. At the very least I see PSP as Sony's XBox. They know that the system will never be profitable, but they are doing what they have to do out of (1) Ego, and (2) Longterm investment. They can only hope to profit on PSP2. But there is the danger that they end up like XBox in Japan: a total collapse of a marketable system which is only supported by PS2 revenue.