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Funnily enough, I was slobbering all over my colleagues new iPhone 5 mins ago and discussing it as a game platform as well.

I think theres one big hurdle though - you cant buy the iPhone standalone without a telecommunication provider's contract. Thus, its not really open to the mass market per se.

But I really do think the day there is no more contractual agreement tied to it, people will start to buy it as a gaming iPod and will definitely be a competitor in the portable games market.