No they won't.

Just so you know, the DS isn't actually outselling the iPhone/iPod Touch. Apple's platform is actually selling at about the same pace as the DS right now, which is pretty remarkable when you consider that the first iPhone model only launched 27 months ago.

In fact, if you launch-aligned the DS with the iPhone/iPod Touch, Apple is 13 million or so units ahead of the DS at this point in its life, and 5 million or so ahead of the Wii. This is comparing Apple's shipped numbers to VGC sell-through numbers, so the gap isn't actually that big, but I think it's worth noting that Apple is actually moving handheld devices faster than Nintendo, and is poised to move into the potentially huge market of China.

There's no question in my mind that the two platforms are heading for a clash, but I really have no idea how its going to play out. There might be enough differentiation that the two products can co-exist relatively seperate just like consoles and PCs, or people might be lining up to buy N-Phones in a couple years because they only want to carry one device with them.

Unless Apple is gonna spend some big money on IPs, I don't see that happening. MS was lucky when they bought Halo.

Apple doesn't have first party. Especially not talented first party.

If they would enter into gaming with a supposedly "casual" console, they would only get the 3rd party shovelware crap, and no the universally appealing games like Wii Sports and Wii Fit.

   iPod touch and iPhone are two different pieces of hardware, as of March 2009, 21.4 million iPhones had been sold, it launched in june of 2007, so in about 2 years it had only sold 21.4 million units

that isn't going to happen.

The ipod touch and iphone are as different as the x360 arcade and the x360 elite.

They both use the same OS and much of the same hardware.

Any game that runs on the iphone and doesn't require GPS (and not many do) can run on the ipod touch.

Your treatment of the iphone sales is disrespectful (only 21.4 million). In a market of so many cell phone manufactuers that's impressive.

The DS has one competitor, the PSP. The iphone has so many I cannot name them all.

It all comes down to money/profits. Apple has 1% of the cellphone market and makes 20% of all profits in that market, RIM is about 15% profit from 1.5% market share. Another 1.5% market share and Apple becomes biggest player in the industry by income.

Apple doesn't need market share to generate huge profits, like say MS who will literally give away consoles to achive this.

I know a few iPod Touch/iPhone developers and at the moment none of them seem too "Bullish" on the platform being profitable ...

Their biggest complaints at the moment are that you have to charge as little as possible to encourage sales, and rampant piracy limits sales. When you combine the two you end up with a platform where you have to develop your application/game at a budget which is tiny for shovelware. Its really only a matter of time before most developers (and more importantly their investors) realize that the iPhone market is not becomming as profitable as expected and the number of moderate budget projects falls to a very low level.

In contrast, both the Nintendo DS and Wii have viable business models for third party developers and (while they may lose some of the "Casual" market") this will result in them being able to maintain their place in the market for quite awhile.

even including the touch, the sales are still far behind the DS, and the reason Nintendo has so few competitors, is because of their software strength, Apple having a lot of competitors just shows that they haven't created something that appeals to the majority.

They will? Weren't they already outcasualizing anyway?? If anything Nintendo will catch up, so it's Apple who has to watch their backs.