Yeah but it didn't had a strong start as you can see in the chart, after the price cut it exploded though.
The first few months were not strong but the first full year was. There also haven't been further price cuts since then. Looking at the potential for the 4DS I see the following:
Potential upsides:
Better pricing including 2 or 3 price cuts during the life cycle.
Better launch to give momentum.
Yokai Watch early in the lifecycle.
Ditto for Smash as well as Splatoon making a transition.
Seeing the success of Yokai Watch Level 5 take more risks and make more new IPs. Other 3rd parties might also be encouraged to take risks.
If Sony don't release another handheld then some of its library as well as audience could migrate across.
Capability for modern software engines could attract some developers that avoided 3DS.
Nintendo may have been complacent with the 3DS and not tried to release games that grow the market. They may take more risks on new IP with the 4DS.
People get bored with mobile games.
People get fed up with mobile games and their irritating attempts at exploitation.
Minecraft?
Nintendo mobile games spread the brand or are successfully implemented as part of their sales funnel for dedicated hardware.
Potential downsides:
Increased development costs will reduce the number of games and the frequency of the games that are released.
Pokemon/Monster Hunter etc may suffer from franchise fatigue.
3rd parties pull out of/cut back in the dedicated space as they don't see growth potential and invest in mobile instead.
People increasingly switching to mobile.
Nintendo mobile games satisfy users and they don't bother with handhelds.
Yokai Watch could be a fad that suffers a rapid decline.
Diminishing returns means people stick with their 3DS and it's extensive library of games.
Nintendo might have run out of ideas.