If this ever comes to reality though ... I think the dedicated handheld is pretty much toast outside of maybe Japan:
What is that? It's a recent patent that Apple was granted for a pop-up home button that can become a joystick.
While you still don't have buttons, the addition of a physical directional input would be a huge game changer for smartphone games. Genres like racing games, platformers, action shooters, etc. would suddenly become far more playable on the standard smartphone.
In other words ... traditional handhelds would be doomed IMO. The only differeniator left would be the X/Y/B/A buttons and quite frankly I don't think there's enough people that care about that, when playing handheld games people just want something cheap, easy to play, and eats up 15-45 minutes of down time in a snap.
