You have to buy the PSN downloads again!

Damn it! But I can understand this because of the different specs and resolutions.
With that said, Kaz Hirai will still be smiling from ear to ear when both XPERIA PLAY and NGP come out. ECOSYSTEM, ECOSYSTEM, ECOSYSTEM. It is what makes Apple succeed right now and why people feel comfortable with their set-up. PlayStation Suite is probably the bigger gaming revolution than the XPERIA PLAY itself. It will spawn more gaming phones. You have to think of phones basically like the PC in the 1990's. Every few months, it is going to improve. I am hoping the next XPERIA PLAY gets real dual analog sticks by Version 2 or 3. As I type this, Sony Ericsson is already thinking about that as well as improving the hardware for the next update.
N-GAGE actually did sell like 3 million in four years. And it wasn't discontinued until 2008. Surprising. I think XPERIA PLAY is just the start the same way Motorola had the Droid for Verizon in late 2009 and now currently has the ATRIX 4G which could be the best Android phone out there. Or the HTC G1 was for Android. Look at all the awesome HTC Android phones since G1 after over two years.
2003 - Nokia N-Gage entered the market. It was at the peak of GBA SP sales.
2004 - DS and PSP were released.
2005 - RAZR was all the rage in the cell phone industry
2006 - DS lite at $129 starts to outsell PSP.
2007 - iPhone. Nuff said.
2008 - The App Store opens. Android was introduced.
2010 - Android blows up. Nintendo is losing money.
2011 - 3DS, NGP, and XPERIA PLAY are announced.
The game has changed. New era, more competition.
SONY gaming consoles = 10-year life cycles.
NINTENDO gaming consoles = 5-year life cycles.
Nintendo is losing money right now and I don't think 3DS or even a Wii 2 (another gimmick) will save them for the next round in the longer-term. PS3 will likely outsell Wii this year because of the price dropping and how Wii has already saturated its sales early on. But PS3 could still live on for another 3-4 years while Wii's future is already bleak. Nintendo is like that escort that gives you cheap thrills on weekends. She already gets bored after she took your money and finished screwing you!
That's why SONY has it more covered with pocket aces. By the time Nintendo is thinking about getting into the cell phone/tablet industry because they are losing their casual audience and have higher-cost games, Apple and Android/Sony could already be dominating the mobile gaming industry. Nokia already allied themselves with Microsoft and XBOX.
3DS and NGP are both already overpriced for handhelds and cost more than home consoles and neither one are really as powerful as them. The sweet spot for the mass market is UNDER $150. That's what made the DS LITE sell so well. $129. Basically, handhelds really are just watered down experiences from consoles. But since casual gaming is everywhere, NGP offers something a little more unique. You release the XPERIA PLAY on all carriers, and it will be the biggest Android phone ever. The price with contract will be no higher than $199, but even FREE - $99 can happen in retail stores after a few months. Beats out 3DS at $249. Bigger game changer than either 3DS or NGP because people will start to realize they want to play on their phone than carry a second device with them with $40+ games.
XPERIA PLAY = G1 OF ANDROID GAMING and will succeed where the two generations of N-GAGE couldn't because it has Android and the mobile gaming's current popularity.
LG OPTIMUS 3D (TEGRA 2). 3DS is not that unique anymore.
http://www.youtube.com/watch?v=s3bSGosFtOA