Apple's iPhone and iPod touch are starting to erode years of market dominance by Nintendo's DS and Sony's PSP.
Both companies are now facing serious competition in the handheld games area, despite sales of millions of units worldwide.
Phil Schiller, Apple's marketing director, told a conference that his company is ahead of the pack in the number of titles.
"Sony PSP has 607 titles, Nintendo DS has 3,680, and the iPhone OS has 21,178," he said.
'Leap-frogged'
Apple has also re-launched its devices with faster processors and third generation operating systems to enable them to handle more complex games.
Nintendo has launched the DSi and its own app store called DSiWare
Joel Santo Domingo, from PC Magazine, believes Apple technology has "leap-frogged" the competition.
"Once developers get their hands on these [Apple] platforms the games will get better," he predicted.
Due to backward compatibility, most of the 21,000 games currently available are not yet taking full advantage of the newest hardware specs.
Video games enthusiasts at a convention in Philadelphia are experiencing first hand the shift in the portable gaming landscape.
"I own the Nintendo DS and I have an iPod Touch. And honestly I play the iPod Touch the most because I carry it with me at all times," said one gamer.
"The DSi implementing a camera and internet features is definitely trying to contend with the mobile market which puts all these features into one," he noted.
Digital distribution
Nintendo is fighting to reverse a 15% drop in DS sales over the past year, while the iPod Touch and iPhone were doubling in units sold.
Al De Leon from Sony said the firm is creating 'bite-sized games'
The Apple App Store has made access to games quick and easy, with new companies and established game makers contributing to its success.
Justin Kubiak, from the video games giant Electronic Arts (EA), explained there are advantages for commercial distributers too.
''It's a much better financial situation for us - we have fewer packaged goods to deal with," he said, "The world is moving in that direction".
He predicted that companies will start adjusting their business models to please consumers keen on digital distribution.
Nintendo and Sony are taking such changes into account. Nintendo released in April its own app store called DSiWare. Plus, Sony released the wi-fi enabled PSP Go and its own download service.
Open source
Sony is also launching launching Minis - a new section in its online store that will offer cheaper games.
"These will be smaller bite-sized games that are really easy to pick up and play," said Al De Leon, from Sony Computer Entertainment in the US.
"We'll continue to offer the huge games like God of War and Grand Theft Auto as well as these smaller Minis," he added.
Nintendo and Sony still prefer selling more involving games at the $30 to $40 (£18-24) price point.
But Sony is now trying to compete with the Apple App Store where some titles go for 99 cents (60 pence) or free to recession-struck consumers.
Competition is also growing from less known console makers who are building devices such as the Wiz on the Linux platform, including an open source app store.
'Any users or developers interested will be able to develop the games through their program and then put it inside our Wiz,'' said Tony Han, from the console's manufacturer, Gamepark Holdings.
The biggest threat to Nintendo, Sony and Apple could come yet from Google's Android 2.0 platform which is given away to phone makers.
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