As the news slows down for what is supposed be the summer ‘silly season’, the industry rumour mill seems to be speeding up.

This time round, Apple is supposedly prepping its iPhone to be a portable gaming machine, wading into a market already dominated by the likes of Nintendo and, to a lesser degree, Sony.

Although the ‘official’ iPhone applications market is noticeably void of any games at the moment – mainly due to the fact that Apple has banned third party apps from running natively on the device – some hackers claim to have found tell tale signs that games are indeed on the way.

Apparently, the iTunes localisation code makes some reference to a string asking the user if they want to remove the games in question. Naturally, this gave way to rumours that Apple has had a games developer partner lined up for some time and plans to offer gaming products via iTunes.

But it seems unlikely that even with Apple’s coolness factor, the company can take on the might of Nintendo in the portable gaming space. Although such a move could be another indication of more convergence ahead between the game console and mobile industries. We have already seen a next generation PSP design from Sony, incorporating a cellphone, indeed, the existing PSP already support VoIP capabilities.

But look at Nokia’s efforts to turn a mobile phone into a gaming device. The ill fated N-Gage has been relegated from a hardware platform, to a software platform and was finally rolled in as a little used part of the N-series operating system.

Ironically though, the iPhone might have inadvertently become a channel to boost Nintendo’s presence in the mobile space. The iPhone has actually been hacked to run third party apps natively, already paving the way for a plethora of goodies, and someone has built a Nintendo NES emulator for the device.

Users can now run any retro NES games on the unit, such as the timeless classic Mario Bros.