I'd say the 3DS is doing "well" at the moment. DS-level sales are out of its reach thanks to smartphones and tablets but it has definitely come out of the figurative hole it was a while ago. Nintendo did an excellent job of turning it around with great software and Pokémon XY will continue this streak. It's also a bit premature to discuss its future without knowing what kind of effect Animal Crossing has had on the userbase.
Yet there are a few obvious issues with the system right now and will (maybe?) be in the future.
First of all, as others have mentioned, the sales are down YOY for the first 5 months afaik. I suspect there are mainly two reasons:
- Lack of model/colour variety, especially in NA. One shouldn't underestimate the importance of colour for portable devices and it's mind boggling that neither the black nor the white XL are available in NA. I've also suspected for a while that not having a neatly designed small version is hurting it. A lower priced "3DS lite" that replaces the first edition alongside the XL is probably a card they aren't quite ready to play though.
- Lack of mass market software. The first few months of this year had great games but nothing that could attract a big audience that wasn't on the platform already. We'll find out soon if Animal Crossing was different and I highly suspect it was. Pokémon will be the same. It must be worrying for Nintendo though that their Touch Generations stuff from the DS/Wii era won't cut it anymore.
The first one is relatively easy to "fix" but the second one is harder. I honestly don't know what the answer is after Pokémon, Zelda and Smash Bros. (and Monster Hunter 4 for Japan) are out. Kirby? Star Fox? F-Zero? Not to say, most of Nintendo's creative force will probably be focused on saving the Wii U.
Which leads me to another issue: The system is being carried by Nintendo almost exclusively. Iwata has mentioned that third parties are picking up 3DS development but there's no indication so far that this is true. I think the West is mostly lost as far as non-licensed software goes and most Japanese games probably won't push sales as hard in NA and Europe. And even games that have the potential to sell don't come over because of reasons. I fear that both Nintendo being notoriously difficult to work with as far as cartridge production goes and game prices are working against the 3DS and third parties. Fact is, they won't be able to and frankly shouldn't carry the system by themselves and should strive to make third parties happy as well. Some measures that I think have to be taken:
- More collaborations with and promotions for third parties. What they're currently doing with Atlus and SMT is exactly the kind of thing they need. Work with Capcom, Square-Enix, Konami etc. to bring games to the system they otherwise wouldn't bother with.
- Improve cartridge manufacturing and distribution.
- Make different price-points for quality software feasible. $30 and lower needs to be at retail and make publishers money.
- Foster specific audiences on the platform. Thanks to Atlus it has gained a fair share of JRPGs but it's lacking in many other areas such as racing games or shooters. This is difficult to pull off without falling into the same trap the PSP did where it simply got inferior versions of console games.
Something that's been rumored is that Nintendo is going around trying to resurrect abandoned franchises with other Japanese publishers and it's already known that they will publish Japan-only games in the West. We'll have to wait for TGS and more Nintendo Directs to get a clearer picture of the third party situation though.
The last big problem I see is the digital presence. The eShop is a huge step up from DSi and Wii and the other social features like Spot/StreetPass and (hopefully) soon Miiverse are great Nintendo-like takes on social connectivity but I fear it's too little. This is where the difference in power to the Vita is a clear disadvantage because many indie games are difficult or impossible to port to the 3DS, practically guaranteeing that most downloadable games targeting multiplat won't come to the system. This leaves only iOS/Android stuff and exclusive games and could hurt them in the long run. What can be done? I honestly don't know. Promote stuff, entice indie developers etc.