The N-Gage and the QD are just 100% standard 2003 model Nokia S60 smartphones with a horizontal casing instead of a vertical one, they're not games consoles in any sense of the phrase, despite Nokia's rather deceptive marketing. If you break the DRM on N-Gage games, they'll run on other S60 Nokia smartphones from 2003, or even non-Nokia S60s from that period.
The N-Gage and QD models only sold two million over two years (a bit more than the 30,000 that Gizmondo managed) but the actual hardware used by N-Gage in the form of other Nokia S60 smartphones sells tens of millions a year, more than all handheld consoles put together, and the sales gap is widening all the time. The N-Gage/S60 hardware itself is the most popular type of smartphone in the world, gaming on phones is immensely popular and growing faster than traditional gaming, and many people do want to game on all kinds of phones including S60s.
But it seems most don't want to buy a phone physically designed for gaming, and most don't want to buy games that come on immensely expensive game cards you have to buy separately and carry with you whenever you fancy a game.
All that smartphone users will see on the Next Gen gaming system outlined by Nokia are games on standard-shaped smartphones, available at the press of a button to be stored on their phone or PC, that are free to download and try, that can be downloaded anywhere through wifi or 3G, and paid for through a user's phone bill.