While 25 million is nothing to sneeze at Gameloft currently has 53 games on the iphone. Pulling that kind of revenue from that type of output does not seem that great to me.

The iPhone won't.

But smartphones, and most likely Android, will, in a generation or so.

The distribution models are better than what Nintendo can offer, and the prices are more reasonable than the PSPGo.

Its just a matter of building a bigger better install base and better product management across multiple phones. Once that happens, the money will be lucrative enough.

100% agreed--the market will collapse at some point, and not just for games as there are simply too many of them fighting for, ultimately, too few dollars.

PCs haven't killed off consoles, so I would say I doubt that traditional handhelds would get killed off.

I could simply say "it doesn't have buttons, how can you play a decent fighting game like Street Fighter?" but no, I won't do that, instead I will say that Apple doesn't have a big support from bigger third parties (Square Enix, Level-5, Atlus, Capcom etc).

Also, the DS and the PSP has something to make them more representative as a portable gaming device, something to characterize them and make them even more strong than the Iphone could ever be: big first party games

My answer? Of course not.

Actually Square Enix, Atlus and Capcom all have games on the iPhone.

I am talking about a new Mega Man, new FFs, Dragon Quest and big support. Iphone doesn't have a big third party support (not even close to the DS or PSP).

Well capcom and other japanese Devs are developing established and new franchises on the device.. If I remember correctly, it just got a remake of ghosts & goblins.

I really don't want to play list wars here, but I urge you to go to toucharcade.com or google "capcom square iPhone game games" or whatever. The list will suprise you. You need to go do some research though, because the support is there, if not new.

I had an Iphone, but that's ok, let's use this list you suggested me:

http://www.joystiq.com/2009/05/21/reuters-capcom-has-more-than-10-iphone-games-planned-for-fy09/ 

Resident Evil: Degeneration- This is a game that you can find in a java based cellphone but now with better graphics, but still, it's a pile of crap (on any platform). DS had a port of the RE: DIrector's Cut game with cool extras (which is very respectable and the quality is miles ahead the RE: Degeneration). The PSP will receive it's very own RE game. Also, I think  you should play it before you call it a good support. The controls are really bad basically because the Iphone doesn't have real buttons (just try to move or escape the zombies).

no, they dont have the market share to do it.

like the pc market iphone marketshare worldwide it's minuscule and will continue to be.