I wrote about this topic a couple of times already (here and here) but here's an interesting update/summary. The gist of the argument remains, only the numbers got better: Microsoft's XBox has sold 29 million units, and that is fairly respectable (in particular when you consider that people regularly fork out $30 and more per game). Apple however (Mr Gates, I hate to say it) outsold its dear competitor by selling more than 30 million iPhones (and, well, iPod Touch).
The hardware install base is fairly similar then. There are two differentiators (besides the price point as per above and the fact that an XBox is not so portable nor meant to be): 1) Apple took a lot less time to get there, and 2) there are more than 25,000 applications for the iPhone, of which about 1/4 are games. That's a lot!
And with its fairly awe-inspiring iPhone 3.0 update (more here or watch the entire keynote), one can now also add in-game micro-payments to the mix, which enhances the flexibility of billing models beyond anything its console or handheld rivals have on offer. Add to this the points raised in my earlier posts and the neat additions to the new iPhone SDK (use music stored on the device in the game, in-game voice chat, push notification waking up an app, stereo Bluetooth, etc, etc) and we are hopefully to see yet another wave of innovative, intelligent implementations of this. It is pretty cool indeed!