I think we could certainly be heading that direction but to get the power necessary to display modern graphics on large HD screens into a small portable, lightweight device, that has battery power that lasts more than 4 and a half minutes might still be a bit of a stretch. The return to digital over optical storage though is something that could certainly pave the way for making a portable home console.
Also let's see how the the 3DS goes before we assume that mobile phones are taking over the gaming world. If Nintendo can still sell 100 million 3DSs in 5 years I can't see them giving up on handhelds just yet.







