At the moment i dont think its a problem because kids love these type of Nintendo games, and at the moment the interest in those games arnt going to decline. ultimately this seems to me to be a question is who are the consumers Nintendo are catering to.

because yes gamers might prefer causal based games that are short when they're on the train home or whatever. but the gaming industry is not founded on these users, its founded on the core gamer, such as myself who whill buy at least 6 or 7 core games in a year. and those gamers will always support Nintendo if Nintendo provides them with great software.

so its not a problem because the company will always be able to rely on a market for revenue, even if some of that market is lost to mobiles, or other software companies. but there are millions of users who will support Nintendo imho so i dont  think it will ever be a problem tbh.

i do think that nintendo's handheld market is very vunerable to the mobile (apple/android) market but that might be because i've become so enamoured with my iphone.  i just can't justify a dedicated uni-tasker any more.

one of the most dangerous things about the mobile market imo, the hand held market last a good 5-6 years before a hardware refresh.  the moble market refreshes every 2 years meaning it can more 2-3x faster.  it's going to be hard for a dedicated handheld market to really keep up with the mobile market.

PC enthusiasts have been saying the same thing for the PC vs. Consoles market.  It appears to matter much less than some think.

I don't believe mobile phone games will move upmarket. The mobile devlopers don't know how to make a game that appeals to the handheld buyer, nor are they willing to fund games that take over a year to develop. They can't yet get mass appeal like Nintendo's first party games can.

At the same time, I don't believe ports of console and handheld games to phones, no matter how good looking (Rage or Quake for example) have sold nearly as well as they would/did on their natural platform. People aren't buying phones for games yet, there is no Halo or Mario or Wii Sports to be the magnet.

If either of those things changes then Nintendo is in trouble, but Wii Sports/Mario Kart/NSMB has the middle of the market between phone games and HD games completely taken.

The PSP and PS3 has shown that media features don't sell consoles. At the moment, it doesn't look like gaming features sell phones.

a handhelt that you can travel in time with :O

I have two theories which will continue to allow Nintendo to remain a solid portable provider.

1. Games. Regardless of anything else, games are by far the biggest differentiators for someone to purchase any game console. Wii Sports, Pokemon, Wii Fit, Halo, Brain Age, etc have all proven time and time again this generation that a quality game will massively push the sales of a game console. In Nintendo's case, as you even admit above, they are great innovators and drivers of 1st class amazing games that propel their hardware business.

2. Children. I think its strongly arguable that portable gaming console heavily favor children as owners more so than home consoles (especially outside of Japan). As such, the majority of the buying decisions come from the parents.

Now based solely on my immediate surroundings of friends/family/coworkers, I would say that when it comes to phones (a portable gaming consoles biggest danger of disruption), children won't have the phones necessary for gaming at a high level, either with apps or online.

Ages 0-9 w/ any cell phone for me is 10%. Smartphones or any with data = 0%
Ages 10-13 w/ any cell phone is 80%. Smartphones or any with data = 0%
Ages 14 w/ any cell phone is 99%. Smartphones or any with data = 30%

Yet, for just the DS it goes from 75% to 100% within the first two segments.

So, I would argue that the largest market for portable gaming consoles, simply won't have the option for phones for portable gaming. Because their parents can't justify the more expensive phones combined with monthly cell phone costs and data packages. Instead, its a better value to buy a gaming machine where they costs more controlled based on what and when the parent wants to spend the money.

Now I do recognize that I am not using a great sample of data and times will change. Its very much possible that cellular data plans will change over the next 10 years and could be come much like minutes are now in family plans. i.e. practically unlimited for little cost for additional lines. If that were to happen, then the only differentiators would be Nintendo games and that may simply not be enough to remain a leader. Even with the Gamecube they were profitable, so it will be enough to remain solvent, but not a leader.

They can't get mass appeal games? How many Nintendo handheld games have exceeded 50M sales? Also given the significant growth in that industry, will it remain the 'truth' that the mobile developers won't know how to make games which appeal.

But that's how disruption works: they start out with a crappy product that only sells because there's no alternative, and then improve the quality of their product until it rivals/surpasses the incumbent.  Here, cell phone games ARE by and large utter crap (if they were on the Wii or DS, the enthusiast press would by and large turn their nose up at them), but that's okay because everyone has a cell phone but few people want to lug around a second, bulky device to play games.  Ergo, the crap game sells!

But as time goes on, and more and more crap games come out, someone somewhere is going to try to compete for the market's dollars by coming out with a cell phone game that isn't utter crap.  It may only be "okay," but we all know it doesn't take much to rise to the top of the crap pile that is cell phone gaming.  And if that person succeeds, he will inspire others to step their game up accordingly: many developers will be left behind, but others will rise to the challenge, and now there will be other cell phone games that are "okay."  And thus the cycle will continue to feed on itself.

This process is pretty much inevitable, and Nintendo knows it (hence DSiWare and, most importantly, Street Pass).  There are, of course, a myriad of ways to combat the disruptor.  Let's see if Nintendo finds one of them.

Wait...how many cell phone games have managed this? o_O

I totally agree with the OP, their position in a medium- long time it's vulnerable, but we'll wait and see. 10 years ago we were still playing Ps1, N64 and Gameboy Color, a lot of things changed since then.

However, even if there are smartphones it doens't mean for sure that handleds in general are doomed...smartphones can also make some quite good photos but those who really like making photos are still buying digital cameras and reflex.