Tablets will replace a lot more PCs and laptops for the typical day to day uses of e-mail, internet use, photos, etc. than they will handheld gaming devices.
The key consumers the handheld market will lose will be those who have outgrown such dedicated gaming devices due to changes in habits whether it's in the transition from school to career, single to married life, etc. But just as consumers exit the the age where disposable income and free time are often dedicated towards video games, there will be just as many new consumers entering the market as they start buying their own games and devices.
As it's been said before, but not nearly emphasized enough, is that what's really in question or at risk within the gaming industry is the viability of $30-40 games for portable platforms among general consumers in a post iStore $.99 throwaway game market.
Yes, there will always be a market for such games, but it is unquestionable that it is smaller than that of the iStore market, so the key issue is sustainable sales figures relative to production costs for $30-40 games that presumably offer a more in-depth gaming experience. In short, can they be made profitably?
The hardware itself is just the means to access said content. Anyone in the market for a 3DS or a PSV because they want to read their e-mail on it, watch YouTube videos on the go, or play $5 mini games (the equivalent of most $.99 games on iOS/Android) is kind of missing the point of dedicated gaming devices.
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