Pachter: Vita will rob Nintendo market share

US analyst Michael Pachter believes that the PS Vita will achieve what the PSP did not and eat into Nintendo’s handheld market share.

However, it’s not all good news – he also predicts that the overall portable games market will decline at the expense of smartphone gaming growth.

"We continue to believe that handheld game sales will suffer in correlation to the growth of smart phone sales, although we think that the handheld games business will remain a healthy niche for the foreseeable future," he said in an investor note.

"With that said, Sony’s announcement of PS Vita pricing (at $249) led many investors to believe that Sony and Nintendo will divide a shrinking handheld market, and likely contributed to further declines in Nintendo’s share price."

Pachter also adds that it’s far too early to predict whether Wii U can compensate for the expected diminished handheld returns.

"Nintendo, in particular, saw its share price decline, largely due to continuing uncertainty about its handheld business, and skepticism about its planned launch of the Wii U next year," he added.

"The company did not provide specs or pricing for the device although the hardware was truly impressive, it is impossible to determine whether it will succeed or fail without knowing how it compares to the competition in terms of pricing and performance."