its already happened. people dont buy an Iphone/Ipod touch for games. They buy it because its a good MP3 playing device/Phone. Games are just a nice side feature. Iphone/Ipod touch = most casual gaming device in existance besides probably the regular phone

   I didn't dismiss your numbers, I just wanted real numbers and not just PR, you only provided PR numbers, not the financial, that's what I was pointing out, you were the one stating that I was in denial, when in fact you just weren't providing what I wanted, but now we have them, so we can discuss the other stuff.  On your premise about install base being a rival to DS, that only has support if a few things occur, first, what is the % of the install base that downloads games, second, what is the sales of games compared to the sales of DS software, third, does the iPhone reach as wide a demographic audience as the DS.

My wording was unclear.

Install base = number of devices in the hands of consumers. I use the word 'rival' in the sense that the two platforms are growing at a similar rate, not to suggest that they are directly competing for exactly the same consumers.

The radically different business model of Apple's handheld software market makes comparison almost impossible. The App Store is only 15 months old, and developers, consumers, and even Apple themselves are still figuring out what works and what doesn't. We're only just starting to see tracking of iPhone apps, and numbers are pretty spotty unless there's an official statement.

Soon, the number of downloads wouldn't matter even if that information was available. Apple has just announced that they're going to allow in-app content purchasing within free apps. That means no more game demos. Developers will simply distribute the game for free with a few levels and include a button to buy the rest of the levels within the game. A game could have a million downloads and only a few hundred people who actually paid to play the whole thing.

The only way to compare iPhone/iPod Touch and the DS is going to be to watch the hardware and where the developers go. Nintendo is obviously untouched right now, but I'm not as convinced as other people that Nintendo is untouchable. All entertainment competes, doubly true when it's competing for limited pocket space.

Apple already outcasuals Nintendo, several billion times over. At least Nintendo does make high-quality games. Any game Apple made would be to make money, and nothing else.

... and knowing several iPhone developers, there is no long term opportunity for mid to large scale development on the iPhone/iPod.

Selling 10,000 copies of an application for $10 or 100,000 copies of an application for $1, and possibly supporting this application with 10% of your userbase paying $1 to buy additional content every month or two, is a great opportunity for an individual to make a living. When you start looking at having 3 to 4 people work 9 to 12 months on a project that would be considered low budget for a Nintendo DS game the iPhone does not produce enough revenue to justify the cost.

There are several problems with iPhone development that people never seem to consider ... One of the biggest ones is that it has the same business model (as far as developers are concerned) as the Atari did. If you produce something unique and special with your game "Ping Pong Hero" a dozen cheesy knockoffs are suddenly uploaded to iTunes called Ping Pong Ball Hero, The Heroes of Ping Pong, and Ping Pong Legends; and your application is immediately downloaded, added in a torrent and shared with the world.

Now, I'm not saying that the iPhone is doomed, but I highly doubt many moderately sized developers will continue to produce applications for the iPhone that are not released to dozens of other platforms in the future. This means that the iPhone will never become more of a threat to the portable videogame system then any other cellphone was.

I couldn't disagree with you more, HappySquirrel.  First of all, 3-4 people working 9-12 months on an iPhone project is unheard of.  It just doesnt take that long to program for the device.  Games are not that complex yet.  Usually a team of developers will work on multiple applications.

Secondly, you say that if you have a successful game, as a result of the business model, you're game will likely be knocked off.  That happens all the time on every system.  Wii and DS both have tons of knockoff games.  A truly great game will succeed.

Also, you cannot just torrent an iPhone game and put it on your iPhone.  You need a jailbroken device and there are only a small percentage of those.  Not to mention Apple has started making the iPhone un-jailbreakable as of a couple weeks ago (That is until hackers find a way to jailbreak it again.)

Oh and take a look at this info:

Ha, it's easy to forget how niche the iPod and the Blackberry were when they started off.

Since this thread is alive again, I'll mention that Apple has posted record profits in its latest quarter. Part of that is due to a 7% increase in iPhone shipments, totaling 7.4 million units in the quarter. That doesn't include iPod Touch sales. By comparison, VGC has DS sellthrough at about 5.4 million units for the same period.

It's interesting to note that while iPhone sales are up, iPod sales are down 8%. Smart move by Apple to expand their devices into the phone and PDA markets before those markets consume the portable media player market.

I really wish Apple would post some information on the App Store beyond total downloads. It would be nice to at least know how much revenue that market represents.