For the PSP, Croal opines that the iPhone is a "threat to Sony's mobile media and communication ambitions," while also showing us how cool a touch-screen PSP would be. The Nintendo DS, meanwhile, could lose a chunk of the casual gamer market; Apple's iPhone "could cause a lot of casual DS owners to put it in a sock drawer and forget about it."
However, the one thing in Sony and Nintendo's favor is Apple itself, and You as a consumer (both, appropriately, appear higher on Croal's mix). Both portable game consoles are a fraction of the iPhone's price tag, and people may not see the benefit in an all-in-one product that may or may not see a fully-fledged game lineup in the future. Also, both the PSP and DS have a sizeable library of exclusive titles, brand recognition, and history. We'd bet to say that the casual gamer would not be willing to shell out $500 for a product of convergence. Not right now, at least.