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But the final product of this Phone/game device contraption was rejected.

Japan meets Finland

A development source, who preferred to remain anonymous, has revealed that there was a skunkworks R&D project run by Nokia and Nintendo in the early 2000s - about the same time Nokia was working on its original N-Gage phone.

The R&D efforts, which were located at Nintendo's Japanese HQ, were successful enough that the concept of a Nintendo phone was taken to the company's board of directors for approval. It was rejected.

At the time, Nintendo was starting work on what became the DS, and presumably thought a dedicated portable console made more sense.

In light of the N-Gage's failure and the success of the DS - four hardware redesigns and 120 million sales down the line - you'd be hard pressed to prove Nintendo wrong.

http://www.pocketgamer.co.uk/r/Various/Exclusive:+Nokia+Nintendo+phone+went+through+R%26D+at+Nintendo+HQ/news.asp?c=22738

Even today a lot of people is still cheering for a future of portable  gaming focused on devices like the iPhone or the iPad. Seems like NIntendo tried 10 years ago and decided to go the other way.