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My god, we're 14 post in and no one has ridiculed the iphone for having no buttons. This must be some sort of record!

But seriously, I agree with almost everything that you have said. The PSP has no sizable market anymore. Remember, Sony was originally billing the PSP as 'the ipod for the 21st century'. Now, forgetting for the moment the the ipod was, in fact, originally made in the 21st century, it is funny as hell that the ACTUAL ipod of the 21st century is now stealing some of the same gaming market that the PSP was meant to dominate.

To be fair, Apple could still screw this up, but it's not looking very likely at this point. Even assuming modest growth, by this time next year there will be more iphones+itouchs than PSPs. Plus, unlike the DS, there really aren't any tier-1 franchises tying people to the PSP. Apple also needs to fix the very real problems with the app store. Namely how it is encouraging extremely inexpensive apps by not providing for demos and trials and also by refusing to weigh apps sales by revenue as oppose to aggregate sales, which pushes cheaper, higher volume apps to the top of the popularity lists.

As for the controls issue, I'm not too worried. Some of my favorite games of all time were played with a single mouse button, and they weren't simple games either. In fact one of them, SimCity, is being released for the iphone. I hope it is good, as it would go a long way towards legitimizing the iphone as a real gaming platform.