Back in May, Sony was confident that its newly launched Playstation Vita and aging PlayStation Portable would combine for a robust 16 million in sales for the fiscal year. Three months later, having sold only 1.8 million portable systems, the company lowered that forecast to 12 million units. Now, after another quarter of weak sales, the company has scaled back expectations yet again, reducing its projection to 10 million portable systems for the year ending March 31, 2013.

Worldwide, Sony sold 1.6 million portable systems in the last three months, less than the 1.7 million PSPs it sold during the same period last year, before the Vita was even on the market. While Sony didn't reveal specific sales numbers for the Vita and PSP separately, it seems pretty clear that Sony expected its newer portable system to make up for declining PSP sales. Instead, the weak portable performance has helped drag Sony's game segment to a ¥1.3 billion ($16.2 million) loss for the first half of the fiscal year, down from a ¥7.1 billion ($88.6 million) profit last year.

Sony's report comes just a week after Nintendo also lowered sales expectations for the 3DS by 1 million units for the year, citing tough competition from mobile and tablet games. It seems both companies were overly optimistic about the market demand for dedicated portable game hardware in a world now dominated by smartphones, tablets, and 99¢ downloadable games.

That doesn't mean there's no place for these dedicated portables anymore—both Sony and Nintendo are still selling millions of units, after all. But both companies obviously expected those portable systems to contribute more to their bottom line, and will have to adjust to a world in which portable games are not the strong, reliable money makers they once were.

For Sony, at least, there are signs that this might not be much of a problem. Combined, the company sold 3.5 million PS3s and PS2s during the last quarter and is still on track to hit its expected target of 16 million home systems sold for the full fiscal year.