I think dedicated gaming 'devices', handheld or stationary are becoming a thing of the past. Media content a la carte, including music, movies and games are all rapidly becoming available and creating a single device that can do it all means more revenue for these companies. Everything is getting virtualized and will be in the cloud before long. The days of yesteryear are rapidly becoming the days of old. The market will never be what it was, its changing... and probably for the better.
The average consumer probably see's less value in a single media device these days. I'm not sure I really agree with how the market has changed but it has changed. People like us, the hardcore enthusiasts are always going to fight change, but we will always be the vocal minority and our tastes do not, nor will ever dictate the market in large.
We are being bred out by a younger generation of gamers who want more from their devices. We are being invaded by a crowd of non gamers who are buying into devices that do more than just games as well.
The lone gamer is a dying breed.
Here's the thing. This was always going to happen, period. Video games are just information; data.
Kids grew up thinking that plastic cartridges or specially formatted DVDs were games, but those were just the delivery system for the information.
So in the long run, complete virtualization was always the end game. Everything would be data delivered to the person who wanted it on agnostic platforms.
Having said that,
how we get to the end game does matter.
Where gaming could be hurt is in compromises forced on it because the technology and infrastructure for the ultimate data agnostic world isn't mature, but the market is pushing for it so companies try to deliver it before its time.
The perfect example is the smartphone and tablet gaming 'revolution'. The prototypical iPad tablet is not a good all purpose gaming device because it can't adequately serve all users. It doesn't present all the pre-requisite interfaces to serve all kinds of gamers, being tilted towards 'casual' touch interface software.
By comparison, a device like the Vita is actually a more mature data agnostic device. It's capable of serving virtually all users of gaming data, having a multi-touch display of sufficient size along with the interface gadgets required for games that don't work with touch alone.
But the Vita is still a closed, proprietary platform. People still have to choose between a Vita (get a richer gaming experience) or one of the current tablets (get access to either a huge range of iOS apps, or to a more open Android environment at the cost of functionality as a rich gaming device).
Everybody always debated a "one console future" because people were stuck in the hardware wars mentality and arguing which gaming company would dominate and destroy all others. But the truth is that the one console future, is the one platform future. Eventually all information will be served to all computing devices. If you want to play a shooter than is built for two thumbsticks, you buy the Vita-like device. If you just want to play games on the level of casual iOS games, you buy the device that is just a screen.
I think we probably still have a few more generations before seeing that world however. Everyone still has too much invested in their own proprietary platforms and walled gardens.
...