I do not think that products like game machines are easy to rate. People tend to think that a game machine or product that isn't #1 is some kind of failure, and that is far from the truth.
Right now the DS-lite is the dominant system for handhelds, there is no denying it. But the PSP is doing just fine and holding a decent player base. Games like Crisis Core, and The Monster Hunter: Freedom series are huge successes by anyone's measurement. Just because there are bigger things (like say Pokemon) does not mean that something did badly.
The PSP is a much more powerful system, and capable of better results when you get down to it, but it tried to innovate in areas (like movies) that just didn't work since chances are someone really "on the go" isn't going to have 2 hours to watch a movie, and even if they do it's annoying to watch a movie on a 4" "eye bleedo vision" screen.
I suspect (and desperatly hope) that the handheld market is about to go through a massive crash. The reason why is simply that the big move BOTH major handheld producers is trying to pull is to force users online with them, making it so that the content/games will be DL only, more profitable due to a lack of packaging and distribution, and of course easier to protect from piracy. This of course at the expense of the consumers who no longer actually own any product (ie a game in hand) and the death of the used games market and such since there won't be any used games.
I (as a consumer) gain nothing from digital distribution, and actually wind up losing out in both in term of my rights, empowerment, and conveinence. Heck, if everything goes 100% online how long before we cease to see "free" online gaming networks, and everything requires you to pay a membership fee for the right to download games from them? I have no trust in, or respect for the gaming industry as it stands now, as it's been bending us gamers over for a long time. Given the way we've been willing to take it without so much as demanding they stop using the spikes and smear on some lube instead, there is no real reason for them to suspect that we will get a brain now, but I can always hope.
Or in short I think the PSP currently holds a perfectly reasonable share of the market to be considered a worthwhile property even if it's not dominant.I do however hope that BOTH next gen handholds (DSi and PSPgo) take a major bath. I suggest that NOBODY support those products for their own good, no matter what games they may or may not release. Unless your going to get a cartridge/chip in hand you should not give them anything... ever.