Depends how you define the portable handheld market. If you mean to say that they are beating Sony, then yes, if you add tablets and phones to the mix, then no, not at all. There is reason for them to worry, even if 3DS will have games that mobile devices won't. Here at the office, most of coworkers' kids are perfectly fine with playing on the iPad, while the DS sits in the corner, that's not good. And tablets don't need to take the entire portable gaming market, they just need to take a chunk to really hurt Nintendo.

Same way as every game console: PCs and Macs have always been excluded from "game console" markets, despite the fact that multi-million dollar games are PC-exclusive (ie: SimCity, Starcraft).

I can't even think of a single multi-million dollar title for handhelds, outside of Bejeweled (which existed long before the smartphone era). Tablets / Phones need games on them for sure, and the market is there... but I'm not really seeing anyone get to the revenue levels of Nintendo games.

That was the traditional way of looking at the mobile gaming market. You miss the elephant in the room if you just consider 'consoles'. Reality is that iPads and iPhones already took a chunk of what was traditionally a Nintendo market segment. This is a trend that will probably continue (tablets and smart-phones will be more pervasive). There will be people (I know some already) who would ordinarily have bought a Nintendo gaming system but won't because the tablet is good enough.

Then they aren't gamers.

Gamers require precision in their controls first of all, and they also require that their fingers don't cover half the screen while playing. There are no good fighting games on tablets / smartphones. There are no platformers. The FPS experience absolutely blows in comparison to anything else.

No one buys a Smartphone / Tablet to game. No one goes out and seeks the iPad for the perfect "Angry Birds" experience. No one picks the Galaxy Note 2 to get a leg up in "Draw Something".

As I stated before, yes, Tablets / Smartphones eat a bit into the Nintendo handheld market. But so did dumb Cell phones in the past with Bejeweled. Indeed: Bejeweled was a paid app with 75 million purchases and 150+ million downloads... its success far exceeds even Angry Birds of today.

But go back to the early 2000s, and lets see you argue that the cell phones should be included in the market share of "handheld consoles". They are a different market. People don't buy Tablets or Smartphones to "game". Tablets and Smartphones are useful devices yes, but they satisfy a different market.

No gamer worth his salt will be satisfied with poor touchscreen controls with an internal compass and accelerometer. The fact that the Wii / DS managed to get a few dozen million "temporary fans" who were wow'd by that sort of thing is interesting... but that is not the market that will support the gaming industry in the long term.

>No gamer worth his salt will be satisfied with poor touchscreen controls with an internal compass and accelerometer.

I am making a distinction between mobile consoles (e.g. PSP, DS, Gameboy) and home consoles like the Xbox, PS3 and Wii. I think the latter group is safe, for now. There are very good reasons to have home consoles, in addition to tablets and smartphones. It's the former that's under threat. Anecdotally, I've seen what friends' and coworkers' kids (ages: 5-14) get excited about. We've talked about how they seem to be content with the current game library on the app stores and don't really care about mobile consoles. Furthermore, I've seen more kids playing on a smart phone, or a tablet, next to their moms out in public, than I've seen them play on a DS or equivalent. This is bad news for Nintendo. Again, it isn't necessary for mobile devices to take the entire market, if they take a chunk, it hurts Nintendo incredibly. The hardcore mobile console gamer market, isn't nearly as big as you think it is. Certainly not big enough to sustain the entire industry. Finally, smartphones and tablets are only going to get more ubiquitous and they are going to get even better, making it that much harder to justify spending extra money on a mobile console and that much harder to justify lugging yet another devices around (in addition to your smartphone and tablet).

>No one buys a Smartphone / Tablet to game. No one goes out and seeks the iPad for the perfect "Angry Birds" experience.

No they don't. They pick-up smartphones and tablets for multitude of other reasons and get a gaming platform for free. This has the effect of expanding the gaming market by turning people who would never have purchased a mobile consoles into mobile gamers (e.g. me), but more importantly I believe it also cannibalizes existing market in that there is a segment of population that would ordinarily buy a mobile console, now will not as they are content with the game selection on their tablet/smart phone.

>But go back to the early 2000s, and lets see you argue that the cell phones should be included in the market share of "handheld consoles".

I wouldn't do that because realistically they didn't impact sales of mobile consoles, unlike modern smartphones and tablets. They were also under-powered, clumsy devices with a tiny low resolution screen and no easy way of loading any programs onto them, again, completely unlike modern smartphones and tablets.

I have a different amount of anecdotal evidence however, where the majority of my friends have gone out and bought a new 3DS (including multiple co-workers, my sister, her husband, myself, several little cousins of mine...). We all have smartphones: some of us have top-end ones. Some of us have tablets as well. But none of us like the gaming experience of it, and have gone out to get a 3DS... and some have even gotten a PS Vita.

So our personal experiences differ. What else can we go on? If we look at historical sales... then the 3DS is selling exceptionally well right now. And Pokemon White 2 / Black 2 have a combined sales of 7.5 million: consistent with previous "partial remake titles" like Pokemon Yellow, Crystal, or Emerald. (remake titles always have fewer sales... but White2 / Black2 came out in 2012, and are thus a better test of the market today)

It took 5 years for the Gameboy Advance to reach 30 million sales. It only took 2 years for the 3DS to reach 30 million. The handheld gaming market has not shrunk. If anything, the 3DS is doing better today than its Gameboy predecessors.

If the iPhone / Android effected handheld sales... you'd think it have done it by now. Or at very least, you'd expect it to negatively effect the 3DS's sales. Why then is the 3DS selling better today than its previous incarnations?

As an FWI, the 3DS was launched in 2011, well after the iPhone and around the same time as the 2nd generation iPad.