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The problem with most of the responses to the OP coming from those who love gaming on their DS or PSP is that they're not looking at the situation from the right perspective. And the result is they instantly dismiss the huge chunk of the portable gaming market Apple is set to take.

I don't see many people buying an iPhone because "I want to play games on it." People are buying them because they want a smart phone with all the functionality it provides, greatly expanded by the rapidly expanding App Store.

Much like the PC, a sizable chunk of iPhones are not being used for games, but the potential market is there for any user who is essentially locked into the device through their phone subscription plan.

I don't consider my iPhone my "portable gaming device." It's my phone. I use it for e-mail, note taking and a list of information providing apps among other things. But it has a bunch of games installed on it that tend to get played during down time, unlike portable gaming systems that are left at home because frankly, I don't go somewhere with the intent of playing portable games.

So next to no one buys an iPhone for playing games. No big deal. Apple still currently has 65% of the smart phone market, which is not a shrinking number.

The big developers have already taken notice and there have been an increasing number of "real" games from EA and the like in the form of well established franchises with one of the key differences being that these games from the major publishers rarely cost more than $10.

But the vast majority of the games in the App Store are still independently developed games. There are rare gems here and there, surrounded by a sea of what I wouldn't even call shovelware so much as straight crap, but as a development platform, it's open to the point that pretty much anyone with a good idea for a game can develop and have a market to publish and sell, which is one of the cooler things about the iPhone as a gaming platform IMO.