Companies tend to do best when they have something to prove. Nintendo has found themselves in this position. I'd bet they're going to go all out at E3.
I don't think the Vita will die. A drop to $199 and a good E3 with original game announcements (games designed for portable play, not console experiences) will boost the Vita. It will not have the same success as the PSP, because of society's shifting interest in portables.
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