DS success funds PSP failures. That's the way it's been for a long time.
Just like WIi shovelware has been funding AAA budget HD games.
So I don't know why PSP continues to get more games than Wii or DS, I can only guess that Sony is offering some sort of incentive, but even if they aren't really losing money, they surely aren't making any either
You have no evidence for any of this. It's just poorly supported conjecture on your part. In fact, looking back, most of your points are. (that sounds worse than I mean it to)
See, you don't have to explain to me why anyone complained about Friend Codes or a single analog nub on DS and PSP respectively. I know why people complained about them. The point is that people complained yet supported the hardware anyway and neither of those things were related to the storage medium. So, tell me, why would 3rd parties complain about those things and
not Nintendo imposing strict N64-esque cartridge policies on DS/3DS cards? Hint: there are no such policies currently in place. We live in the internet age. If Nintendo was jerking 3rd parties around like the old days, we would have heard about it. They'd still support the hardware, but they'd make their voices heard by leaking it to IGN or Kotaku because news outlets love juicy stories. Your fears that Nintendo will suddenly revert to Evil-Empire-Darth-Yamauchi-Run-Nintendo are baseless.
I think we're done here. I never said Nintendo would use cards; rather I said it seems like something they would do considering their displeasure with optical media. Do I really think they'll do it? I'm sure it's been tested in Kyoto. I'm leaning on them not switching to cards even though it totally fits their company culture. Nintendo has a habit of embodying "I play by my own rules, nobody else's, not even my own."
For all our sakes, I hope that the press just bags on the new Nintendo hardware at E3 this year. Everyone going nuts over the 3DS last E3 is what led to Nintendo upping the cost.
I don't know. Nintendo just said 3DS isn't selling as well as they expected. That was their own fault. They overcharged, like you said, and to top it off, their launch line-up was pretty unspectacular. I know they apparently were trying to help 3rd parties which was awful nice of them, but really, when the best 3rd party game on 3DS is a port of a game that came out last year on home consoles, it's hard to justify that choice. In a perfect world, Nintendo will learn from its arrogance, hopefully sooner rather than later, and charge fairly for Cafe. They better. 3DS will recover; Ocarina of Time will see to that, but Nintendo doesn't have the luxury of making these kinds of mistakes in the home console market.