Hmmm,
This is an interesting interesting situation.
Most people believe that in the US the PSP will hit answer between Febuary to late March. This gives Nintendo DS a 3-4 month headstart and a launch during the busiest shopping season. With the number of presales for the DS, and the future of Pokemon on that system in Japan the DS is going to be ok. Nintendo is going to be fine.
In America during shopping season nobody cares about when something else is going to be out, all they care about is what is out now. Therefore I see strong sales for the DS this holiday season and beyond.
My question is really about next year. Sony is obviously taking a profit hit, and its going to be a pretty big risk. Here is why. Say conservatively Sony is only losing 25 dollars per unit. If they sell a million units that is 25 million dollars lost. They are going to have to make that up in sales of games, movies, and music for the PSP. Its pretty fair to say that unless Sony plans on releasing PS3 next year (which I think the date is actually for 2006) then their main focus will be on the new system. Very smart.
There is just one problem. Microsoft. If the Xbox2 is released next year, Sony is going to be losing market share to the new system, unless they launch at the same time. Sony's PS3 is going to be a huge risk with the expense and technology they are using, and in America Sony's name isn't nearly as dominate with the Xbox out there.
Basically, Sony could be shooting itself in the foot with these big products and losses. The competition could eat them alive, and even if they maintain marketshare, their loses will not reflect well on the company.
Nintendo however is releasing the system at a profit most likely. Every unit they sell adds to their warchest. Every game sold adds to the warchest. Every delvelopment fee to 3rd parties adds to Nintendo's funds. So if the project fails or isn't as successful as Nintendo hopes, it still would not have lost much, if anything at all.
Nintendo will basically have 3 systems out for developers to use:
GBA: developers wanting to create a game on the cheap will use this system.
NDS: Developers wanting to create unique titles or a different handheld market will go here.
Cube: The homesystem market.
The development for the GBA is going to die. Perhaps it will be a slow death, but it is still going to die, and really Nintendo doesn't care. It has already made its profit off the system, and the system is already pushed to its limit.
Nintendo DS is the new Gameboy Advance, just as the SP was. This new system will be around for probably 2-3 years and then Nintendo will release the real Gameboy successor.
The key is no matter what Nintendo is making money...and the same isn't true with Sony.
In fact, next generation I see Microsoft gaining the most marketshare, followed by Sony, and Nintendo with a last place, but in stronger positions then it was with the Cube, and perhaps tied with Sony. The difference is Nintendo will be making a profit, Sony won't be, and Microsoft may not be either.