I think how it will play out will be that 3rd party devs will continue to develop DS compatible games for retail but tip their toes in the Dsi market by making smaller DSi specific games or apps for DSiware download and watch to see how the DSi userbase grows.
By making DSi only games for download, you are not alienating any DS users because AFAIK there is not currently a download option for DS games anyway.
If DSiware becomes popular and begins to get a large number of quality games it can act as an enticement to current DS users.
edit: after reading that article it looks even more like this is being positioned as a direct Iphone comptitor with the focus of the Dsi being on small downloadable apps that don't make sense selling at retail(at least in the beginning).
I wouldn't hold my breath waiting for too many DSi specific games at retail.
By making DSi only games for download, you are not alienating any DS users because AFAIK there is not currently a download option for DS games anyway.
If DSiware becomes popular and begins to get a large number of quality games it can act as an enticement to current DS users.
edit: after reading that article it looks even more like this is being positioned as a direct Iphone comptitor with the focus of the Dsi being on small downloadable apps that don't make sense selling at retail(at least in the beginning).
I wouldn't hold my breath waiting for too many DSi specific games at retail.
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