I have been following news about the upcoming PlayStation Vita handheld gaming system and, as its release date nears, I wonder more and more if its success will receive a similar lackluster release as the Nintendo 3DS.

The Vita is quite a technical powerhouse and looks like what the PSP should have been. And while it has an ample software lineup on release to avoid a lack of interest due of content, this new iteration is too little too late. The handheld gaming market has now expanded to include mobile phones in a very big way and the market that the Sony PSP and Nintendo DS once competed in has become vastly different.

The issues jeopardizing success are not due to a nonexistant market, but rather due to a nuanced market. In fact, the market for video games, is evident by the 24 hour, $400 million profit, Call of Duty: Modern Warfare 3 just raked in. The obstacle instead, is due to the advent of smartphones, causing the market for a standalone handheld gaming devices to become a bit redundant.

Adding to this hurdle is the young adult demographic the Vita caters to. It’s not that it doesn’t have titles for the younger audience, but with enhanced graphics, 3G connectivity, dual analog sticks, and multiple touchscreens it is certainly selling specs that an older market tends to care about. But this is a demographic that is already connected and invested in their smartphone. The key value of that last sentence being “connected.”

Take the recent success of Call of Duty. This was not a result of it having a profound story– in fact, the story is so fragmented and schizophrenic it’s sometimes hard to even get into. It did not sell so well because of groundbreaking graphics– it uses the same engine as the last Call of Duty and is certainly not the most visually stimulating game available in the market. No, Call of Duty sells because of its multiplayer. It is a game that breaks sales records and moves consoles because it offers a connected experience—an attribute that is very much an identifier of the mobile market.

Often, in both messaging and product development, companies miss the vital fact that no one switches for something they believe they already have. Sony might soon experience, as Nintendo’s 3DS has been experiencing, that the market might not have been pining for a new generation of handheld gaming systems, but instead might believe the phone that they own is the only handheld gaming device they need.

I’m in the center of the cell phone world today as I’m speaking at the CTIA Wireless 2011 conference in Orlando, but we’re all being overshadowed here by AT&T’s proposed purchase of T-Mobile.

This is being touted a shock wave because it will leave just three big players in the market – AT&T, Verizon and Sprint. But my first reaction is that it means another poor brand has failed, as they always do.

I’m not so worried that a choice has been taken away from me because I never would have chosen T-Mobile anyway. It has been a troublesome brand at best. Its “Stick Together” brand is wrongheaded because you’d have to believe that everyone is pulling us apart in order to want to “stay together.” And its recent marketing campaign mocking the style of the Apple’s great “I’m PC. I’m Apple” spots only helps the competition because it looks so desperate (and overly clever).

There are, of course, worries that the increasing consolidation of the market will lead to less innovation and the less choices can stagnate a market. But the competition between the big carriers is fierce, among the most competitive and either of the three would be scared not to keep up.

In addition, consumers demand innovation so much that providers, including the forward-thinking phone makers such as Google and Apple, can’t innovate fast enough.

No, I don’t think consumers will suffer all that much from this, although it does creep closer to the days when there was only the Bell System controlling land lines. It is the natural progression of things because the T-Mobile brand wasn’t going to survive anyway.