I am of the opinion that they are in fact in separate markets. For one thing, not everyone who is into handheld gaming owns a smart phone or tablet. A great portion of mobile consumers who own smart phones and download apps for them were never in the handheld gaming market in the first place. Strictly as a small example, both my boss at work, and my best friend own smart phones. They both download cheap gaming apps for them like Angry Birds or whathaveyou. Neither one of them owns a DS, PSP, 3DS, or Vita. Neither one of them ever planned to either. So, in those two specific cases, their purchases of mobile games had zero effect on the handheld market, because they were never in it in the first place. They are just taking advantage of a new feature in the phone market that allows them to play quick, cheap games on said devices. Secondly, are smart phones going to start releasing gaming geared editions like a Dual Screen or XL smart phone to provide a gaming experience to their consumers that Nintendo doesn't? I don't think so, because that were reduce the practicality of their primary purpose, which is making telephone calls. Look at how poorly the N-Gage, hold a taco shaped object to your ear while talking on the phone did.
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