Kotaku has a great interview with Nintendo president Satoru Iwata:
Iwata didn’t let the presence of an Apple laptop and the iPhone do all of his talking. He never said the words “Apple” or “iPhone” or “Android,” but when I pointed to my iPhone that was recording our interview and began asking him about why some people think that device is the future of portable gaming, he knew exactly what I was talking about. He knows people wonder about the long-term viability of dedicated gaming handhelds. He cited the arguments himself and proposed that there are people who argue that the period of gaming handhelds “has passed us by” due to the popularity of gaming on “a device that you’re always going to be carrying with you at all times”—a phone. He knows that logic is what produces the doubts. “I don’t think that opinion is completely nonsensical,” he said.
Mario and other famous franchises like Zelda and Metroid will keep Nintendo handhelds sell relatively well in the short to medium term. The issue for Nintendo is the generation of children not growing up playing with Mario, but with Angry Birds on their parents smartphones. Those children won’t be clamouring for Nintendo hardware when they reach their teens.
This is why the Playstation Vita is doing so poorly compared to the 3DS. Sony doesn’t have the advantage Nintendo possesses when it comes to popular franchises.