Nintendo fired the first shot in the latest war over portable handhelds with its 3DS, but things are not going well for the company that used to comfortably own the portable market. Sales of the hardware is slower than expected, games are being held back until more gamers exist to buy them, and Nintendo was forced to radically slash the price in an attempt to drum up consumer interest. Nintendo is facing many challenges these days, but it's not just competing with its own past systems and the upcoming Sony Vita—its largest competitor may be your smartphone.

The 3DS is in trouble, but who is it fighting?

There are two ways to look at Nintendo's stumble vis-à-vis the Vita: Sony has been given a great opportunity for success, or Sony will face the same mass of budget-conscious gamers who have moved on to less expensive but fun smartphone titles. Dedicated portable gaming devices used to do battle only with each other, but now they face an external threat.

"I honestly don't know what [the 3DS sales] means for the Vita—it depends largely on why you think the 3DS is having trouble," Penny Arcade's Jerry Holkins wrote. "Certainly, games on the Vita look more expensive than their 3DS counterparts, and we can be confident that there'll be a premium attached. The reality for me is that even as a 'gamer,' an enthusiast, a true adherent, my phone is enough even on a trip. Period."

The point sometimes escapes people when they talk about how much better dedicated portable devices are for playing richer games. But most games simply have to be "good enough" and convenient. If you already have a smartphone and an hour to kill, plenty of top-notch games can be downloaded in a minute for a dollar. With the 3DS or Vita, you're being asked to buy expensive hardware and then feed it with games that cost $40 and up.

Smartphones also present a compelling deal for small, adventurous developers: it's inexpensive to create a game for these platforms, and developers don't have to worry about physical storefronts, packaging design, or cartridge manufacturing. Sony is now pushing for a digital platform that relies heavily on downloads with the Vita, but Nintendo still seems to believe the future rests with expensive, physical carts. Trying to buy one of the few digital games available on the 3DS via the system's e-shop is a slow, frustrating process.

"I don't believe there is a direct competition between the 3DS experience and that delivered on smartphones; however, I do agree there may be some causal factors related to the growing mobile trend, specifically with developers beginning to experiment within these new emerging markets, which may have stolen resources away from more traditional projects, ultimately impacting the quality," Jesse Divnich, the VP of Capital Research and Communications at EEDAR, told Ars. He points to a lack of AAA content as a major reason for slow 3DS sales and claims that better games and lower prices during the holiday season will help sales.

"I don't get the sense that developers are preferring one platform over another," Divnich continued. "At the end of the day, our industry goes where the money goes, and if developers can earn more money on emerging platforms, that is where the talent will ultimately transition to."

Phones will make gaming truly mass market

PopCap has seen great success releasing fun, high-quality games at low prices on a number of platforms, and it has gamers playing its titles on everything from phones to the screens on the back of airplane seats. The company was recently acquired by EA for a reported $1.3 billion and should remain one of the most powerful players in the digital gaming landscape. For PopCap, cell phones are going to be the mainstream gaming "console" moving forward.

"Increasingly, games are designed with mobile devices in mind. PopCap is not only on board with this, but has been at the forefront of this movement, and we see those trends gaining further momentum in the future, which reflects our strategic directions," Giordano Bruno Contestabile, PopCap's senior director of Product and Business Strategy Mobile, told Ars. He pointed out that many gamers still want to play games on their portable gaming devices and they will be supported, but the growth and convenience of mobile phones as game consoles is hard to ignore.

"My view is that smartphones will constitute the quintessential mass-market platform, while dedicated handheld consoles will represent significant and important niches," he explained. "And, to be clear, what I mean with this is that smartphones have the potential to make the majority of the world's population into gamers, therefore greatly widening the overall market and making most traditional platforms 'niche.'"

Huge numbers of people already own a smartphone, the devices are carried everywhere, and great games are always available at a low cost. With discretionary spending taking a dive in many households, both the 3DS and the Vita are going to face the challenge of convincing us we need to spend hundreds of dollars on new hardware—and one more thing to carry in our pockets—along with games that are exponentially more expensive than those available in the iOS and Android marketplaces.

Advantage: your phone.