Neglected to mention that the iPhone is vastly more expensiove than a DS or PSP when you factor in the cost of a phone plan.

@ avinash

Actually it was confirmed a long time ago that 4 million people had jailbroken for iDevices. Now it's probably in the double digits. Factor in that cydia and Rock actually think it's worth the time to sell their own unapproved apps, then you start to get the real picture.
Some devs even said that within launch, the ratio of pirated to sold was 95% pirated, 5% sold.

I don't see Apple ever challenging either Sony or Nintendo is a big way but they're going to undermine some of the casual market from both. The iPhone is a better multimedia device than the PSP and it's a more convenient casual gaming device than the DS. It's a more capable device than both, though that comes at the cost of dedicated, long-term gaming options. As said earlier, it's a better quick-and-dirty gaming system when you don't have a better option with you. For some people, that may be enough to stop them from buying a DS or PSP entirely... though casual gamers don't buy nearly as many games as their hardcore counterparts, who buy several games for every system they own, minimizing the overall impact to the DS/PSP.

What no one is touching on here is how much of a boon the iPhone/App Store is for developers. A few people can build a game and if it's good, they'll make a bunch of money on it. That isn't available at all on the DS because of the immense cost of cartridge fees and manufacturing of a DS cart, and then getting through Ninty's licensing program. The same applies to any disc-based PSP game. Sony does offer the PSN but how many PSP owners use it? The App Store is far more convenient and can be accessed at any wi-fi spot or, in the iPhone's case, anywhere with a signal. To even set up a Touch device, you need iTunes access so every owner is already set up in the system.

Then there's the cost of games... the iPhone offers such cheap gaming that even a kid who gets a small iTunes allowance (and several that I know do) can buy a few games a month. That's a pretty big deal and has the potential to change how we think about gaming... Viva la digital distribution! It is the rebirth of the small-time developer and I welcome it.

Which you buy if you actually want a phone plan.

If you don't want a phone plan, you can buy an iPod Touch for more than a DS or PSP, but less than a Go.

The dynamic that doesn't get a lot of attention when it comes to iPhone vs. DS vs. PSP is that these devices aren't just competing for portable entertainment. They are also competing for pocket space.

At home, it's easy to have a specialized device for voice communication, a specialized device for gaming, a specialized device for work and network communication, and a specialized device for movies and/or music. Lots of space to store them all and some good reasons to seperate rooms for these activities.

But you do not want to be carrying an array of specialized devices in your pockets. You want one small device which lets you communicate via voice or email, look things up on the internet, read documents, take pictures if you see something interesting, play music while you're walking, and play movies or games if you're sitting and bored. Convergence has its price, but it pays some very real benefits in the mobile space.

For many customers, the iPhone or iPod Touch doesn't have to beat the DS or PSP as a gaming device. It simply has to offer a good enough gaming experience that people don't bother throwing their DS in their pocket in the morning because they already have their iPhone with them if they get bored. That's what threatens Nintendo and Sony.

I bought the psp because it plays games that gives the quality of home consoles (take final fantasy :crisis core (got about 50 hrs of gameplay) and resistance retribution for example. As long as the iphone cannot offer these kinda games that are indepth, I never see any reason it could compete with the psp. Oh and please guys, stop using iphone sales as comparison. I have a bunch of friends with iphones and they MAINLY use it for phone calls and a few different apps.

Everyone on this forum needs to step back, take a deep breath, and realize that they are not a part of the typical gaming audience.

We're all going to continue to buy handhelds. We're freaks that way. The iPhone/iTouch isn't targeting our demographic.

Well, when the iphone gets a hold of the targeted audience and they get into casual gaming ,they might wana try some "real" games, therefore they head for the psp or ds. Everyone can learn how to drive but you might wana be on the race track eventually if you love cars

Did they make the claim that PSP and DS can't do local multiplayer? Yeah, they don't do local multiplayer over BlueTooth necessarily, but theirs is just as good.

iPhone steals nothing. The device is around 400-500cdn(no plan) while the DSi is 179. People who are buying the iPhone are distant gamers or gamers to be. The market Nintnedo is after. That's why the DSi has seemingly entered compition with the DSi. As the iPhone as it is alone is not going to be entering the field yet.

Google for iPod Touch, mate