Handhelds aren't dead. But they should be killed anyway.

Is Xbox Surface the dawn of a brave new era for handheld gaming - game-centric tablets?

Dedicated handhelds are dead. Vita was practically stillborn and 3DS is a pale imitation of its hotcakes predecessor. No-one wants them and the handheld as we know it will cease to exist within three years.

Or so the internet would have you believe. But then, if you believe everything you read on the internet, peanut butter gives you cancer, Robert Pattinson is gay and the Government’s reading your emails and it’s all a big conspiracy, maaan.

But while handhelds are doing okay, Sony and Nintendo need to realise 2012 is a different world and forge ahead with something truly innovative to stay relevant.

For Nintendo, a family-friendly tablet would clean up. I’ve heard of so many parents looking to buy their (spoiled brat) children tablets for Christmas, but who were uneasy at the thought of having a credit card registered on it and were concerned at what youngsters might be accessing.

But Barnes and Noble’s Nook HD tab has already demonstrated a workable solution. The device supports multiple accounts, with parental controls and even the ability to set time limits for how long it’s used and what (if any) apps can be bought on each account.

But what about the games? That’s easy. The old £40/$60 model has to go out the window. In its place, cheap, pick up and play fare with the option to buy extra levels.

I’m not suggesting New Super Mario Bros be sold for 99 cents. I’m suggesting one level be available for 99 cents, or two or three dollars tops, with the option to buy new ones for another 99 cents each, or an entire world for a fiver.

It would essentially mean one NSMB games’ worth of levels would be about double the price of a normal boxed release, with the flipside being you needn’t buy anything but the initial level for a pittance. Do the same for Mario Kart, Zelda, Layton, and others, and suddenly you have a host of cheap, pick-up-and-play titles providing a steady revenue stream at low development costs.

Use a custom UI Android OS, let it play videos and music and access the Android store, and suddenly you have a tablet able to compete with others on the market while appealing to a section of the market which has yet to be tapped – kids.

But it doesn’t just have to be for youngsters. The same exact kind of model can apply to games for older people. Brain Training/Age could be sold for $2/£1.20 for ten Sudoku grids, for example.

Market the thing as a tab for all the family, with multimedia functionality and the trusted Nintendo brands and the thing will sell itself. Heck, it’d probably be easier to market than the ‘THIS IS A 3DS, NOT A DS’ adverts would suggest.

Microsoft already has, according to rumours, started putting together a games tablet. The internet (see previous disclaimers) claims the PC bods are working on a top-secret 7 inch Xbox Surface tablet, with full Live capabilities, achievements, Xbox controller support and exclusive games.

You see, tablets are what people want. They’re in. Love or loathe the company, when Apple unveiled the iPad, everything changed.

Now 10 inch tablets sell in their millions, while the 7 inch market is a bloodbath of undercutting – Google and its Nexus 7 are going head to head with Amazon’s Kindle Fire HD and Apple’s iPad Mini. All three are different, yet excellent devices and are gaining huge momentum going into Christmas.

Some say games handhelds and tablets are different markets, but I’m not so sure. 

I'm not sure, with 3DS at £120-160, and Kindle/Nexus from £129-199 (the non-HD Kindle is £129), how many people really would choose 3DS instead. Sure it's got New Super Mario Bros, Mario Kart and Professor Layton, but I think many people will happily sacrifice dedicated games for the plethora of apps, big HD screens and multimedia.

Put it this way: I'm known as the techie of the office in work. A colleague asked me what she should buy her 8-year-old grandson for Christmas - a Kindle or a Nexus 7. 3DS didn't even come into it.

I realise I’m now the kind of blogger who would have said Nintendo and Sony need to make smartphones to survive a couple of years back, when that school of thought was all the rage. But look at it this way: if Sony had made PS Vita a phone – closer to the PlayStation Xperia phone, but with Vita specs/capabilities - sold it on contract and refreshed it once a year, I’m confident it would have outsold what the Vita has mustered by now.

It’s not that 3DS and Vita aren’t great – I love them both. It’s that the two companies are clinging to the past when they have everything at their disposal to carve out an inventive, innovative future with tablet devices. They won’t die if they don’t, but they’re missing out on the tablet bandwagon, and doubtless a lot of potential sales, too.

For some, tablet gaming is a bitter pill to swallow. For everyone else, there’s an app for that.

Is the handheld console still relevant?

Uncharted and Zelda are great, but are people happy enough with Angry Birds in their pocket?

PS Vita looks great. Sony's new handheld has twin analogue sticks (for COD on the go) and graphical power to match PS3, all for only £280 - which is very cheap considering the technology involved is right on the cutting edge.

PS Vita smashes iPad, iPhone and 3DS in terms of graphical power, and gameplay experience. A full set of buttons is always going to be more useful than just a touchscreen - and Vita's got one of those, too.

But PS Vita could be a huge failure. The handheld market has changed so much in the last five years since the original PSP release, and PS Vita may just represent an outdated business model.

The 3DS, Nintendo's newest handheld, has had a stuttering launch, and while the lack of games must be partly to blame, it's tempting to see the rise of the smartphone as the real culprit.

Do people still want to play on a dedicated handheld? Do the masses want to lug around a hefty handheld console when they already carry a smartphone everywhere they go?

That smartphone, too, already has games. Nothing on the scale of Uncharted, like PS Vita, or Zelda 3D, like 3DS. But thousands of games ranging from free to a few pounds/dollars. Why spend £40 on a new 3DS game when you've got Angry Birds expansion packs at no extra cost?

The smartphone, whether iPhone or Android, is clearly a huge threat to the handheld gaming market - and threatens to destroy the market entirely.

There is one thing that can save PS Vita and 3DS though: Differentiation.

What Sony and Nintendo must do is show people that these consoles offer a rich enough, a different enough experience to warrant the extra expense; the extra pocket weight, the dedicated games machine.

Sony need to show that having a PS Vita means having a PS3 in your pocket. Uncharted: Golden Abyss (Pictured, right) is basically a full-fledged version of the blockbuster franchise, and it looks every inch as beautiful as its bigger brother, but it's portable. The iPhone will never have that - and even if one day smartphone graphics caught up, the iPhone lacks the twin analogue sticks, face buttons and Trophies.

Will it be enough? Not for some. But there will always be a crowd looking for a deeper experience and I think Sony still has a market to aim for; a market who want Smartphone + 'proper' games machine.

Nintendo has a bigger task on its hands. Aiming mostly at casual gamers, Nintendo has a tough time persuading the people who bought a DS with Brain Training, or Professor Layton, or Sudoku, that the 3DS is what they need next.

The 3D is the key differentiation for Nintendo, but even that will not last - Glassesless 3D capable smartphones are coming, and they're going to be here by Christmas.

The only thing Nintendo have left are their big franchises: Mario, Zelda, Pokemon, etc. These games will never appear on an iPhone, and the company now more than ever needs to rely on these games' appeal to push the 3DS into peoples' hands.

But it all seems a little desperate. In reality, both companies' business models are beginning to look a little dated.

Differentiation may save them for now - but one day, iPhones or other Smartphones will figure out a way to close down these differences, too - and both game makers will have to try to stay one step ahead or risk falling behind.

Looking at the 3DS sales, I fear it may have already happened.