"We need to see more unique Nintendo content priced more competitively for the 3DS to succeed."

Speaking recently to Industry Gamers, Michael Pachter gives his view of the upcoming PS Vita and how it will not only eat into 3DS sales but also how it will face stiff competition from smartphones. Patcher believes that the future of handheld gaming is firmly in the hands of smartphones and that both Sony and Nintendo are going to struggle with their new systems.

When asked about the PS Vita and whether it is in direct competition with the 3DS, Pachter believes that even though they may be targeted towards slightly different markets the PS Vita launch will "cut into the 3DS's sales, both in Japan and in the West". Despite this though, Pachter still believes that the biggest threat to 3DS is not the PS Vita but is instead, smartphones.

These aren't just the thoughts of Pachter as Colin Sebastian agrees that handheld devices are competing with smartphones. "Our research suggests that every handheld gaming device is competing against smartphones. There does appear to be a limited segment of gamers that still wants a dedicated device, and from that high level perspective the PS Vita and 3DS will be carving up the market."

Despite them both predicting that Sony and Nintendo will be struggling for market share, Sebastian does believe that younger gamers will be drawn to 3DS rather than the PS Vita. "That said, the games available on each device offer a unique experience, and so user demographics will limit the amount of direct competition, with younger audiences skewing towards the 3DS."

Despite struggling against smartphones, Nintendo can at least relax with the knowledge that young gamers will be 'skewing towards 3DS' but when Nintendo has tried so hard to make the 3DS a more adult orientated handheld, is this the market they want?

Pachter believes that the biggest handheld battle is no longer Sony Vs Nintendo but instead, traditional Vs smartphone. Pachter believes that the iPhone market will only get bigger with the arrival of the iPhone 5 and that customers will be even less likely to purchase a dedicated handheld as smartphones get more advanced. "The iPhone 5 and cheaper iPhone 4 make it more likely that Apple will continue to expand its share of the smart phone market, winning over those older casual customers I'm talking about, and making them less likely to purchase a dedicated handheld."

Sebastian is in agreement with Pachter's comments but does believe that if Nintendo offer more unique content which is priced competitively they might be able to grasp onto the market and put up a good fight against smartphones. "Yes, in general the increasing installed base of smartphones is eating into Nintendo's handheld market share. We need to see more unique Nintendo content priced more competitively for the 3DS to succeed."

What do you think of the comments made by these analysts? Sony recently stated that they also believe the smartphone market will be a threat to both handhelds and that competition between Sony and Nintendo is a good thing as it helps innovation. What do you make of all this? Do you think there is still room for dedicated handheld systems in the market?