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Then GBA, mobiles and the internet. Quite how a useful method of connecting a computer to the internet could destroy the games industry is anyone's guess.
Games? Well look at the phones. Everyone is constantly making them SMALLER, because that's what people want. The days when owning a mobile was like carrying a brick around are long gone and not to be revisited, and even with our technology, a computer to challenge consoles in the same box as a phone would be pretty darn big. Then think (I know you didn't last time, but try) about the method of control. The crappy buttons on the mobile wouldn't encourage lightning fast gameplay, and everything new has an analogue stick, which again isn't exactly ideal for a mobile.
Basically, they don't share a market because they offer different things, and anyway, everyone already has a mobile, and the novelty value is rapidly falling away. Gaming wasn't inhibited by phones selling at their peak, and WAP goes even further away from taking little kids money that would otherwise go on video games. The main way I see them affecting the gaming industry is in a positive way, with modems being released that will allow consoles to connect to the net and hence offering a whole new dimension to old/handheld consoles.
The only threat mobiles pose is they will one day make it impossible to sit on a train without some loser in a suit shouting "I can't hear you, I've gone into a tunnel".