Ngmoco CEO Neil Young says the “PSP is done and the NGP is dead on arrival” and he places the blame squarely at the feet of the iPhone.

The portable gaming arena is an interesting place these days. The Nintendo 3DS is rolling out and Sony’s NGP isn’t too far behind, yet all eyes seem to be turned toward the iPhone and its Android-based cousins, and more to the point their app stores, which are overflowing with literally hundreds of thousands of apps, many free or very close to it. If you’ve played around with an iPhone in recent months, you know it brings some pretty serious gaming power to the party and Young, who founded ngmoco in 2008, thinks there’s big trouble ahead for conventional handheld makers.

“I think they are hurt; I think they’re clearly hurt. I think PSP is done and the new [NGP] is dead on arrival,” he told IndustryGamers. “It’s really difficult to compete with an app store that has hundreds of thousands of applications and a wide range of options where the average price paid is around $1.20 and there are tens, if not hundreds of thousands of free applications that are really high quality. So I just don’t think Sony’s going to be able to compete with that.”

He denied that the PSP or its successor recreate a “PS3 quality experience” and said the broad range of functionality available on the iPod Touch and iPhone trumps the pure processing power of Sony’s devices. Nintendo is a little better off, he added, thanks to its library of hugely popular games and characters.

“I think Nintendo will likely be competitive,” he said. “Nintendo has great franchises and there are tens of millions of people who want to participate in those franchises, so that always helps… But the real question is the degree to which there’s a third-party community.”

As a publisher of iPhone and Android games, it’s fair to assume that Young is a little biased in this matter, but that doesn’t necessarily mean he’s wrong. Calling the NGP “dead on arrival” may be a bit extreme but handheld gaming has an inherently greater appeal to the mass market simply because of its reach. You buy a DS or a PSP because you want to play certain games on it; you buy an iPhone because, hey, you need a phone. Once that happens, and the floodgates of the app store open up on you, I don’t think it’s unreasonable to suggest that the odds of picking up a dedicated handheld are significantly reduced.

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