The N-Gage was too early and Java games could not compete with what people were used to play on handhelds. Also, N-Gage had a big problem: it was neither a proper gaming machine, nor a proper telephone. It feeled like a compromise, and was destined to fail.
The MIDP stuff at that time was supposed to be mutli platform, but mobiles were too different - so you had to adapt your game for 10 or more mobile phone types.
iPhone is one big thing where you know if you app runs on one, it will run on millions of iPhones, and the release time was placed very clever - when everybody was talking about Apple and iPod.

N-Gage tried to compete with handhelds, which of course had to fail.
Handhelds were superior to anything a mobile could offer game wise back at that time.


But already at times of N-Gage there was a lot of money to make with mobile games. Just two years later you either needed some contract with TV commercials to get you product sold at all, or you needed a real killer. Too late for lone wolves, as mobile game studios already had their frameworks set up and were able to release games in next to no time.

Apples Appstore centralized the place where you get all your apps, which made it easier again for indies. Before you had stuff like Jamba, and what do I know. You had compatibility problems, and endless amounts of CRAP. Mean contract stuff, pitfalls and all the like. Slower web access with mobiles.
All this reduced the impact of the mobile game market.


And you wonder why the interest on iPhone and Adnroid is even bigger now?
Easy. Platforms like PS3, X360 or PC offer huge hardware power. For the smaller studios and lone wolves it is hardly possible to keep up with visual quality of their games. It is a lot more time and money consuming than just a few years ago.
So the iPhone and Android market is perfect as place to get games sold which are less effort and less cost intensive.

The big studios?
Wherever there are indies which make their money, the big studios can do so too. With the payoff that development costs are a LOT lower compared to PS3, X360 and PC.
Once indies make no money anymore in that section because the big studios more or less blasted it, just look where indies go next...

Yeah, someone will come up now with "But what's with XXX? It sold a million time and was programmed by a single guy". Get real, those are the very exceptions and are not really representative for the common indy developers.



All this is "IMHO" and own experience I had while working on mobile games.