Nintendo had the same problem as before with PS1 vs N64, I.E. whilst the value of their game development is much higher than any one single company and few approach their ability to rack out hit after hit, the number of developers out there outweigh them through sheer numbers. There are litterally thousands of projects for iOS ongoing and through luck or skill some will rise to the top.

Value has a lot of different dimensions, LOL if you've been on this site long enough you'd have seen all the threads saying the PS3 is better value than the Xbox 360 because of X, Y, Z. You have to consider with iOS many different factors such as:

• Price of games, $0-10 vs $20-35, the average person spends more on games than their games machine.
• Usefulness of other features, I.E. browser, movies, music.
• Price of hardware $subsidised, $169 iTouch or $499 iPad.
• Educational value for families, I.E get an iPad 2 because Johny won't have to lug 14lbs of textbooks anymore and can study easier. 
• Is a game like Soduku worth $1 or $20? It isn't as if you get a better soduku if you pay 20* the price either...

In the end it is complicated and simple at the same time. There are many overlapping dimensions between the products, the enemy of the good in this case is good enough. It is far easier to justify owning a handheld gaming machine when you don't already own something with significant overlapping functionality whether it is a tablet, iTouch or smartphone you own. There is already data suggesting that parents are indeed buying their children iPhones, iTouches and iPads for various reasons and lets not miss one major feature which is that all games bought for one child are immediately and always available to the other so long as they both have iOS devices.

I never said that. I'm very well aware of iPhones sales and the extremely high adoption rate of smartphones in general. But the core market is still people in their 20's to 30's. Nielson agrees with me: http://www.geekosystem.com/smartphone-ownership-by-age/

Also the question was "are they buying it over a 3DS?" Maybe a little. Both devices fulfill very different purposes. As for comparing sales of 3DS and iPhone / smartphones in general: Really? That's like comparing computer sales with sales of home console: Consoles just play games, computers do a lot more. And I'd never argue about sales here. Of course you are totally right.

But I think we shouldn't focus too narrowly on these things. My point was: Smartphones can't "steal" a market Nintendo doesn't cater to. I don't doubt iPhones would get a chunk of Nintendo's mass market - they certainly would. But Nintendo doesn't cater to that market anymore. They stated time and time again that their focus for now are the core gamers. Last year Iwata was talking to investors about their japanese sales slowing because teenagers didn't buy a Wii and how to adress that by producing more core games. So to wrap up my opinion:

1. Are smartphones eating into the mass market Nintendo adressed with the DS? Yes, absolutely.

2. Are Nintendo's bad sales caused by smartphones? Not at all. Nintendo doesn't even try to adress that market anymore. Hence the low sales.

3. Would Nintendo be able to produce another 150 million selling handheld? Yes because there was still room for growth. Smartphones would've eaten into Nintendo's sales but sales would've stayed extremely strong and Nintendo would've been able to compete directly by pushing out high quality software.

It's not point 1 where I disagree with you guys. It's the second one (and consequently the third as well).

http://blog.flurry.com/bid/77424/Is-it-Game-Over-for-Nintendo-DS-and-Sony-PSP

Numbers are posted there

Pachters right, Nintendo had that crowd, but the phone market made casual titles more accessible. He's also said that the 3DS and Vita would be affected by the phone market. Is he wrong for saying that? He couldn't be anymore right. The phone market is making casual titles more accessible to casuals who just want simple titles. Kinect is the next big thing right now for the casuals. I was playing Fifa and Deadspace on my friends IPad the other day. He doesn't have a console, nor does he want one.

This, and it pains me to admit it, as I was a big supporter of the feature. BUt people just dont really give a crap, not as much as I thought they would. Hell after playing a few game I dont even give a crap anymore

I agree with everything you've said. I also agree this would have an effect on Nintendo's sales but again my main point was the bolded part in my post. As for the bolded part in your post: Why are you acting like the eShop didn't exist? Of course games on the eShop are still more expensive but not by law. Again if Nintendo actually cared about these customers they would push the eShop more agressively (like make it open to really small developers just as on iOS). And as for other features  (internet and learning): Yeah, that's why consoles died in the 80's when computer adoption rates went up.

Here is my main point again: Nintendo doesn't try to appeal to the mass market anymore. They keep talking about core gamers, released their handheld at a high price and didn't put out mass market software. 5 years ago Nintendo's main mission was to grow the market and they succeeded with their handheld sales doubling and their console sales multiplying by a factor of 5. They grew at a speed that rivals Apple's current growth but they were not able to maintain it because they stopped focusing on growth. 

Basically put a Nintendo releasing a "2DS" at $149 with a focus on mass market games like Brain Age, Super Mario, social games and e-learning would see way higher sales. Would smartphones eat into those sales? Certainly. Would Nintendo be in trouble right now? Probably not because there was still some potential for growth. I guess sales would've stayed roughly the same (add growth potential, substract smartphones). 

One thing that is being lost with the percentage talk or a sudden surge in iOS devices is that many time people are buying REPLACEMENTS. Most people update their smart phones every 18-24 months. That means they constantly move hardware. But some people treat these replacements as new users. That overstates the market. Also, many people buy them for work and not for gaming. Some have game machines while others were and are never going to buy game machines.

Pachter's statements seem to be especially and increasingly anti-Nintendo. There are some analysts (e.g., Motley Fool) who have upgraded Nintendo to a buy because of the 3DS and WiiU. Meanwhile, Pachter reminds me of a previous favorite among Nintendo Fans -- Sean Malstrom -- who seems to think he has a better idea of the direction Nintendo should take than those running the company do and is highly offended that his ideas are not being followed.

Mike from Morgantown

What is exactly misleading here? I remember you didn't question pie charts when it was Nintendo Wii vs PS3 and Xbox 360 in total sales revenue. The pie chart is only questionable when it shows something that doesn't sit well with you? Anyway it is unlikely that a total revenue figure is going to be released unless Apple themselves decides to release one. I haven't seen anyone question the selling power of Steam, yet once more no total revenue figure is forthcoming.

If Nintendos losses are rooted in releasing an expensive hardware feature which doesn't pay for itself then that is their problem. It sounds a lot like the losses Sony incurred with the PS3 Blu Ray drive, I.E. big losses for little gain and in the end sales were determined by other factors. They didn't release a feature like that because they wanted to impress us with their technology, they wanted to make a handheld console with a gameplay feature which cannot be copied by iOS devices. Their new home console Wii U incorporates some of the tablet features of iOS devices, is this a coincidence?

Nintendos business model is their own business. They released a system with X margins and produced it with current market conditions already known to them, you can't argue that they were surprised by something which was already happening, the recession started years ago and has been an ongoing problem ever since.

If a tree falls in the woods and all the lumberjacks have blindfolds and earmuffs on, did it really get felled? It takes many years for developments in the market to unfold. You argue about strong sales and yet complain about the price cut needed to reach those sales. It isn't just smartphones in the market, you also have to consider the impact of the non phone tablets such as the iTouch and iPad and combined they reached 156M in the previous year. It is asinine to assert that 156M sales of devices with similar capabilities have not impacted the total installed market share of the DS range of handheld consoles.

What does 156M prove? For one, there are at least 70M distinct customers buying the devices. With DS, DS lite, DSi, DSi XL and 3DS having been on the market and the relatively low attach rate there are likely far fewer individual customers than the sheer sales numbers suggest as devices break, wear out or are simply traded in for the next version. There is no proof that the DS (overall) market size is increasing with the release of the 3DS and other indications say that it is decreasing at the same time that iOS based device sales are increasing.

The motley fool, really? LOL ok...

That argument simply doesn't make sense. You're acting as if a customer is Nintendo's for life and so long as they cater to them they will never find a competitors offering more compelling. So you'd have also argued that had Sony released a $299 PS3 which had the same values as the old PS2 that Nintendo would have never had much success because Sony would have therefore catered exactly to their old market as they had many times before? An incumbent is only ever self defeating? So all that talk of disruption and blue ocean was simply trying to make a good story out of Nintendo's success?

You also seem to be arguing that it is just iPhone vs DS, not iOS which has a range of devices just as Nintendo has a range of DS variants.