Chris Kohler:

But this is no longer a fight between two handheld gaming machines. It’s a fight between traditional handhelds and smartphones. Sony doesn’t need to show what Vita can do that 3DS can’t — it needs to show why you’d pay $40 per game when the competition’s price is $0.

The consoles' price is one factor to consider but I believe it's Mr. Kohler's second sentence, the obscenely high cost per game, that makes traditional console/handheld gaming market unappealing. When similar levels of enjoyment can be had out of a 99¢ game and consumed in a way that is convenient to the consumer, not the middle-man distributer, I find it difficult to argue otherwise.