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It's a valid concern IMO. Apple just announced over 500 million iOS devices have been sold, and Google said a few months ago they're activating 1.3 million Android devices per day. Even though neither PS Mobile or Smartglass has been a huge success as of yet, it's very smart that Microsoft and Sony are beginning to tap into this massive userbase.
I think Microsoft in particular can be very agressive with Smart Glass - they could theoretically replicate a lot of the Wii U's functionality without requiring people to buy a new console (use your 360) or any hardware (use your iPad/tablet). With the hardware capabilities being similar they could get most of the Wii U ports on 360. And that could end up extending the 360's lifecycle a bit longer.
And it's not hard to imagine a scenario where Smart Glass is a requirement for all 720 games, where they'd all have some form of "second screen" experience. Suddenly Nintendo's biggest differentiator wouldn't be as big of a selling point anymore.
Oh yes, you're right, there's crazy potential. If you're gonna go down the "screen in your hand" rabbit hole, re-purposing people's phones and tablets makes a lot of sense, much more than a proprietary device.
The big problem, though, is what do we use this for? So far, I'm not seeing a convincing argument for the technology. You can't play away from the TV because all these devices don't have any physical controls (at least the Wii U will have that going for it, however big a pull that is, so that big differentiator won't be totally disappearing), so it basically comes down to some sort of info dump for most games. I am eager as all hell to see what game will eventually say "OK, you're playing this on your Xbox, and you're controlling it with your iPhone", but even when that happens, it's still just a spin on the DS concept (generalising there but it kinda is), kinda like The Wonderful 101 or Rayman Legends.
At the least, yay, more asymmetrical multiplayer. That could be a big deal. But it's too early to call- and too early to be calling for Nintendo's head for not being so eager to dive in. That's all I'm saying- I'm definitely not suggesting MS or Sony shouldn't be pursuing this path. Someone needs too.