I've given this thing a bit more thought, and I still have to say that there's no way Apple can touch the DS. The iPhone can't disrupt the DS, although the iPhone is selling really well and will propably sell even better with the new version and all the new countries it's expanding to. But the price point is just too high for disrupting the DS.
BUT, and this dawned on me, Apple can disrupt the portable application distribution market. I know it's not as easy to think about it from this angle, but the way software is distributed is a market like any other, and the current "product" being offered for the mainstream has existed for a long time: the distribution of a physical copy containing the software. I know, digital distribution of software has existed for a long time, so why would this be any different? Well, despite the existance of digital distribution, it is a market that is still in its infancy, there's only a handful of services that exist and even then, those services supplement the traditional distribution model. And, in all of those cases, the manufacturers have to be very wary of maintaining the existing distribution channel, they can't afford to piss them of via bypassing them online. Now, enter Apple with their AppStore, which is the ONLY legitimate channel to get software for your device, and you can see the difference right there. Taking a look at the situation from the Christensens disruption strategy point of view, I got the following shield and sword.
The asymmetrical shield of motivation: Nintendo and Sony get their revenue (for DS and PSP) from the traditional channel, and they can't afford to disrupt it or they will risk losing much more than they have to gain. Apple, on the other hand, has no other line of distribution for the software, so it has to make digital distribution work. Apple has nothing to lose and everything to win.
The sword of asymmetrical skills: I don't believe this to be as important, but Apple has a huge advantage with iTunes. They already have the infrastructure in place, and they have the brand recognition in digital distribution that the others can only dream about. Also, since Apple has no history in the gaming market, it can handle the publishing process differently, which may lead to a different business model emerging.
There are in all likelyhood a ton of things I've missed, so I welcome all discussion. Do you think Apple could disrupt the distribution channel of portable device applications? One huge block in their way is of course the fact that AppStore works only for Apple devices, but could it still become the dominant business model that other's have to respond to?
