I disagree! I think Nintendo wanted both consoles to coexist in order to provide an additional revenue stream. When you want to play traditional games, you grab your Gameboy Micro or the still-highly-pocketable GBA SP. When you want a stylus and dual screens to play Nintendogs, you grab your bulkier Nintendo DS.
It didn’t really work and Nintendo pivoted—possibly also to compete with the PSP—but I see the Gameboy Micro as evidence of their strategy. Compare an original model DS and the Gameboy Micro side-by-side—the size difference isn’t entirely unlike that of an iPhone versus an iPad Mini.
It’s not the first time Nintendo tried to create a third category between console and handheld—see also the Virtual Boy.