Another factor I see is the growth of tablets. Schools are starting to use tablets such as the iPad. Parents are buying their kids iPads and iPod touch in lieu of gaming systems. I think buying an iPad which can be used for productive activities is more palatable to parents than a gaming first system.

 I'm not entirely sure about that - app sales for 2010 totalled around $5 billion for the year, and projects for 2011 are currently poised at rising to $15 billion. While that is just a projection (and an ambition sounding one to me) there's no doubt that app sale revenue is going to go up and up every year for the next few years, whereas handheld software sales are going to dip for the next few, as we migrate to new handhelds.

 And for a rough figure for console - the Video Game Industry (That is all consoles Handhelds Accessories) is worth just under $21 billion. Handheld is probably worth less than half of that (Due to lower cost of systems Games) so infact it's not impossible to believe that mobile networks and app sales will soon surpass the revenue generated by handheld game and consoles sales (Let alone just software sales).

  Whether or not it happens in 2011, or 2012, or 2013 it'd take a very brave person not to believe that app sales will soon 'dwarf' that of handheld console games sales (And possibly video games as a whole lol). Of course, 'app' is a pretty broad term that isn't just games, but equally my $10 billion estimate for the handheld industry is far higher then it should be so er... that can cancel out :P.

Links:

http://www.telegraph.co.uk/technology/apple/8284367/Apples-iPhone-and-iPad-to-push-app-sales-beyond-15bn-in-2011.html

http://www.gamepolitics.com/2011/01/14/video-game-sales-down-2010

Honestly, I don't ever see $10 applications being particularly popular on these handsets; and (unless China, India and Africa buy into these phones rapidly) it will take decades for sales on individual games at these prices to match the revenue of handheld gaming systems.

I know a handful of people working at "shovelware" developers who release games for portable devices and the PC; and (right now) most projects that are exclusive to smart phones are being heavily subsidized in order to create a market, even with how low budget these games are (often a fraction of the development costs of a Nintendo DS game). From what I have been told, most of their games that sell for $0.99 or $1.99 on iTunes are also being sold for $10 to $20 on popcapgames.com or steam; and the number of units sold are similar on both. They have no ability to increase their price because every game they're selling soon has a dozen clones that are free or selling for $0.99 on the iPhone.

You might see the occassional large publisher push a big budget iPhone game at $20, but I'm expecting every last one of those games will disappoint their publisher for the next 5 years (at least).

I may be the only person in the world but I think that Sony is positioning the NGP to be in a great spot hardware wise.  These look like the innards of the iPad 2.  If porting games to it is as easy as I suspect it will be because of the hardware Sony has much more western support this go round.  Western devs are supporting the iOS more than the DS or Wii in many cases.  Unreal Engine for iOS might even easily run on the thing.  

The Ipad is sold at a gigantic markup.  it's 3G model 16GB cost 257 including manufacturing costs according to isuppli as of feb 10, 2010.  Sony could price this aggressively if they chose.  I could even see a similar 249 maybe a 299 price tag.  I think they will be stupid and go for much higher but a tiny initial loss wouldn't be so bad if piracy isn't an issue this time.  

Everytime I see NGP. I think Neo Geo Portable. Am I the only one?

That's not really the point. It's about clipping the margins. The iPhones/Android sales don't need to exceed Nintendo and Sony to put them in a serious situation. By eating away at the edges, profits could take a big hit.

To early to tell. We haven't seen jack from either so far and they aren't even out yet.

There are certain styles of gaming that the iPhones will probably take over, namely 5 minute games like Bejewled or Tetris, but larger budget games will remain on handheld systems because they are the only platforms that can generate the revenue to cover development costs.

Thanks but it appears to be only a Mini game :(.  Oh well maybe Gameloft will come out with a proper game for the NGP that has online multiplayer :).

No, goddamn Sony for stealing SNK's property! >:x

Also, it's Neo Geo Pocket. :P