It was when I got my Galaxy S2 that I realised smart phones in their current state offer no real competition to the handheld market. The game don't compare, in any possible way. If you try to incite that smart phones are a threat to the 3DS and Vita then you have to concede they're also a threat to home consoles - but no one does that, cause we get that it doesn't make any sense.
Yes there might be people who played the DS tetris on their commute to work and now don't need a 3DS to do that, but I don't think that's ever been an integral part to Nintendo or Sony's software sales model. Conversely I think they could quick play on the psychology that people play these games on their phones, then Sony come and market to them "Hey we have better handheld games" and they 'upgrade' from the Smart phone to Vita, or something.
I just don't believe anyone who plays a lot of PS3, or Wii, or DS, or whatever can play iPhone games and not just want to get a dedicated handheld. It's the whole casual market that things maybe become a bit more blurry, but give how they too to the Wii and DS I don't see any worries.
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