The issue isn’t the DS outselling the 3DS. The issue is that the DS is outselling the 3DS despite sacrificing profitability. Profitability will be the magical word in the Eighth Generation. If you’re not making money, you’re losing the power to do things in the future. Microsoft could put out a Xbox because of its profitability with Windows software. Sony could put out a blu-ray playing game console in 2006 because of its prior profitability of the PS2. Now, Sony doesn’t have that power. And Microsoft is losing that power as well. The DS and Wii didn’t happen because of magical ‘innovation’, it happened because the GBA and Gamecube were profitable. If the 3DS and Wii U continue to stagnate in profitability, Nintendo will be very limited in future options.
There is no point in making sales if you’re not making profit off them. The 3DS being outsold by the DS despite Nintendo’s price cutting shows just how bad the 3DS is performing.