It appears that you see different devices as being unable to have a hand in the same market, like a company is only allowed to go after one specific market at a time when it produces a product. You're basically saying "Product A is a ___ made primarily for the X Market; therefore, it cannot compete with Product B in the Y Market, even though they share much functionality and there is a significant portion of consumers that may choose one over the other in the Y Market because many of their functions overlap."
You want a visual? Refer to the Euler diagram below. The circles in the bottom right rectangle represent the video game market (A), the home console market (B), and the smartphone/tablet market (C). B and C are independent of each other. All B are A, but not all C are A. More C is becoming A, leaving less room for B.
Comparing a compact car to an 18-wheeler is a sensational strawman argument, and I think you already know that. A compact car is a consumer vehicle bought for personal use and an 18-wheeler is overwhelmingly used for commercial purposes. These really are for different markets because you don't use them for the same reason at all. I can't go to a dealership and purchase an 18-wheeler, and even if I could, it would require a special license to operate it. I can walk into a store and purchase a home console, a handheld console, a phone or a tablet with no objections provided I have the money. I can buy them all, or I can choose just one or two that are most relevant to my tastes and interests... the very thing hundreds of thousands of consumers do every day. And a factor in those decisions is the gaming capabilities of these devices.
So while smartphones, tablets and especially portable consoles are not completely representative of the entire video game market, to say that they don't have an effect on home console sales is to stick your head in the sand. That's like saying smartphones haven't taken a major bite out of the home phone business because one is tied to a land line but offers higher quality and the other is portable but has a Swiss army knife of features. That's like saying smartphones haven't taken a bite out of the consumer digital camera market because one is made only for snapping photos while the other has it as a side feature (if you think not, then Kodak shareholders would like to have a word with you).
I have more to add, but it's almost quittin' time at work, so I must end this already lengthy reply now.
No it's not a strawman argument. The selling point of handheld consoles is that they are *gasp* HANDHELD. They are self-contained units that offer a portable gaming experience. Consoles are in no way self-contained. They need a TV and power supply.
Okay compare a compact car to an BMW 5 series. Both cars are they not? This is as much as I'm going to talk about this topic because, frankly, its fucking rediculous. To compare a handheld to a fucking console shows just how far some people are willing to stretch things in order to lessen the severity of a situation. I work in buisness & know that if you really, truly, honestly believe that they are part of the same market, I hope to god you don't go into buisness/economics/retail. It's simply common sense that they are not part of the same market as what the offer are two completely different things.