Will Smartphones Eventually Kill Gaming Consoles?

Gaming consoles, such as Microsoft's (NASDAQ:MSFT) Xbox series, Sony's PlayStation, or even Nintendo have been around much longer than mobile gaming. Smartphone gaming, on the other hand, arrived at the scene just a few years ago, but has made serious inroads and entered a new stage of creativity and viability.

The huge smartphone gaming development has been orchestrated by mobile hardware coming of age, thus allowing for higher-intensity graphics and smooth game play that appeals to the heightened expectations of the modern consumer. The mass adoption of mobile devices has also made it more attractive from a financial point of view to produce higher-quality gaming titles. Will gaming consoles survive the smartphone onslaught?

High-end smartphones such as Apple's (NASDAQ:AAPL) iPhones and Google's (NASDAQ:GOOGL) Android phones have all but completely pushed out gaming console titans such as Nintendo DS and Sony PlayStation Portable. Sony's anticipated PSP successor, the PlayStation Vita, has been a marketing disaster and barely racked up $10 million in sales since its debut two years ago. For comparison, the iPhone managed to sell over 5 million in 2007, its maiden year. In 2013, the maker of Macs sold 150.2 million iPhones. Since the release of the HTC Dream in 2008, Android activations have exploded, crossing the 900 million mark last year. While the older console gaming platforms are hardly dead, their popularity seems to have a perfectly elastic inverse correlation with smartphone gaming.

The smartphone has its limitations
Smartphones do not pack the same hardware power as gaming consoles. They have lower raw processing power and limited battery life. In terms of sheer logic, consoles will always have an upper hand on smartphones. Consoles are not constrained by small physical size, short battery life, or storage limitations. Modern consoles such as Sony's PS4 or Microsoft's Xbox One are expected to be around for 5-10 years, based on the companies' previous product cycles, with a few minor hardware revisions. Future iterations might support highly advanced facial and body recognition systems, aka Ultra HD/4K high-definition displays, which are not practical on smartphones.

But, mobile gaming has its pros, too. A smartphone screen can be used to augment console games, or utilize onboard sensors to create new genres such as location-based social activities (think Android's Ingress, or the accelerometer/gyroscope-powered game play present in mobile racing games).

Simple games like Angry Birds lend themselves easily to mobile gaming. Likewise, turn-based games such as Draw Something would be strange bedfellows with consoles, yet are phenomenally popular on smartphones.

Consoles don't have to lose for mobile to win
No matter how advanced smartphones become, they are unlikely to fully replace consoles. As long as consoles continue expanding their capabilities, they will probably remain around for many years to come. A marriage between mobile gaming and consoles is today a reality, since you can play more streamlined experiences that easily transition between a smartphone and a console. It's also possible to create a mobile sub-game that utilize smartphone sensors such as Bluetooth, GPS,NFC, cameras and so on.

The future of consoles
The two most popular gaming consoles in the world right now are Sony's PS4 and Microsoft's Xbox One. Microsoft revealed in January this year that it had sold 3 million Xbox Ones in 2013, while Sony did much better with 4.2 million. Those sales hardly signal a dying platform. Although many investors were surprised by Sony's huge lead over Microsoft, the huge price disparity between Xbox One and PS4 is perhaps the biggest factor to blame. This has not been lost on Microsoft, and the giant software maker recently cut the price of the Xbox One in the U.K. from £429 to £399( about $716 to $666), which is more in line with the selling price of PS4, which goes for £349 (about $583) without a game.

Ultimately, consoles will do some things much better than smartphones can ever hope to achieve. It's fair to say that console gaming is a niche that is not likely to be fully substituted by mobile gaming.

The future of mobile gaming
The rise of iPhone and Android ecosystems have led to about half a billion iOS devices, and close to a billion Android devices sold around the world, making the smartphone a mass commodity. The wide adoption across a wide cross-section of demographics and geographical locations forms an enticing market for big gaming houses. Mobile gaming will no longer be catering to a niche market, but rather a large and rapidly expanding mainstream.

The transition is expected to pick up steam and accelerate through 2016, especially in emerging markets, and we are likely to witness many gaming developers shift their attention to mobile. This trend, combined with faster LTE networking, more powerful hardware, on-board sensors, and increased battery efficiency will result in a big renaissance in mobile gaming.