Not quite I think. Because what's really growining on PC gaming? Flash and MMORPGs as far as I know. It could have some effect on Live Arcade games and the like but I doubt it will affect big guns anytime soon. It's a different market the way I see it.

Online (incl. but not limited to MMO) is growing, digital distribution is growing. Concerning DD we don't know what are these games exactly, since there're little public available details on PC digital distribution market. Anyways why this makes you think that's a whole different market, though at the same time you're implying that there're no difference between smartphone and handheld gaming markets, while it's clear that smartphones mostly occupy low-end segment, technically the same position PC gaming is all about ($15/month MMO subscriptions, MMO & social games micro-transactions, a lot of cheap small games and  lower costs of traditional bigger games on Steam and other DD services mean that average PC gamer spend quite less than console gamer, i.e. PC gamer is lower-end gamer).

Back to your original point... in reality anything with userbase of few millions is worth at least porting platform for third parties as long as tech (= easy to port, and availability of middleware solutions for higher-tier projects) and platform philosophies (= digital distribution for lower-tier projects) are comparable. More support = bigger userbase = more support etc. Of course, it's expected that entry fee (devkit cost, royalties) is higher on consoles, but any small dev that have money to rent an office will consider going multiplat on smartphones/handhelds.

5 million Wii's, is that in line with vgchartz expectations?

Edit: Oh, it's two quarters.

Nintendo expects to ship 4 million units of 3DS hardware and 15 million units of 3DS software by March 2011.

I think your skepticism is pretty healthy, but slowing DS sales aren't the only evidence. There was also a (slightly dodgy) study that placed iPhone game software revenue above PSP software revenue in the US, and now we have this UK survey of what kids want for Christmas:

http://www.telegraph.co.uk/news/8084305/Children-want-gadgets-not-toys-for-Christmas.html

The top 10 toys for Christmas 2010, according to the report are:

1) iPhone 4 (14%)

2) iPod touch (13%)

3) iPad (12%)

4) Kinect for Xbox (6%)

5) Zhu Zhu Pet Hamsters / Kung Zhu Hamsters (5%)

6) Flip Video Camera (4%)

7) Toy Story 3 Jet Pack Buzz Lightyear (4%)

8) PlayStation Move (4%)

9) LEGO Harry Potter Years 1-4 Video Game (3%)

10) Barbie Video Girl (3%)

I have no idea who would give their child a $500 iPad or a smartphone with an expensive data contract, but the iPod Touch seems a pretty reasonable alternative. Here's hoping the total lack of Nintendo products in that list is because all these kids already have Wiis and DSes.

As haxxiy says, Apple is on track to sell around 50 million iPhones this calendar year, and perhaps as many as 40 million other iOS devices on top of that. These devices are much more attractive to the expanded audience than you think. iOS is basically doing for general computing what the Wii and DS did for gaming: It's lowering barriers for non-users by making the interface simpler and more engaging.

Must be nice to have parents that can afford an iPhone for their kids.

There's always the DS as a consolation prize for those who can't afford the iPhone.

So, DS, 3DS and Nintendo in general are pretty d0med, I take it.

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