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Mostly it was because of the battery life, from what I remember of those days.
The thing is, at the time, colour was getting a big thing, so doing like Nintendo did and release a black and white console was seen as a step backward. But the fact of the matter is that battery technology at the time just couldn’t handle the specs of the Lynx.
Nintendo had already the experience of their game n watch (IIRC, the one I had was Mario n Luigi trying to make cakes in a factory) systems n they were popular, and unlike nowadays, they decided to ignore the hype and go for the gameplay over the colours.
And of course, Tetris happened…

I dunno why, the first time I saw a PSP, I immediately thought of the Lynx. Somehow I think they are also heading in the same direction…