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The only way Apple will make it in a console gaming situation, is if they stop being Apple.

Otherwise the console will be inferior to other competitors, but with a much higher price (aka the "Apple Tax") just to get the slightly unique OS experience offered on that console.

They would do exceptionally well in a handheld market if they can make the device itself a reasonable price without having to be on a contract. An iPod touch for $200 is just too expensive. Their handheld gaming device would have to be $200 and still do everything and more than the iPod touch all while making it bigger to add buttons.