I see cellphone gaming as a competitor that is entering slowly in the industry. It won't be in the scale of handhelds yet, but the developing costs are low and the userbase is too big to ignore.
The future N-Gage, PSP-Phone and even the iPhone, could make a market of their own inside the video game industry. With features like TV-Out, Bluetooth connectivity and WLAN, these cellphones can even become "a console" with an additional bluetooth controller.