Well first of all, the whole idea of the GBM is to appeal to the rest of the market - anyone who doesn't bring a GB because it's too big for the few minutes it'll be used. The SP was getting close, but it's still too big for people like myself. IMO the GBM has gotten to the point where anyone wouldn't mind slipping one in their pocket/purse. This was the appeal of the original and widescreen Game&Watch; something that I wouldn't say for the SP or larger systems.
Having said that, DW's concerns are easier to answer:
The battery life doesn't have to last that long. Most people wouldn't spend as much time on a GB as the current GB gamers - kids. These new gamers will probably play as much as the mobile phone gamers, which is maybe an hour or two max per day.
Special carts are of no concern for casual gamers either. If they can put up with what the mobile phones can offer, than can put up with a few incompatible titles out of hundreds in the GBA library. Same can be said for the lack of 8-bit GB support.
Samor already pointed out that mobile phones have smaller and worse screens.
Finally the price... This is harder to explain. Definitely if we only look at the functional features, the GBM can't compete at that price. But considering the market it's aimed at - older casual gamers, $99 USD is a small and fair price for them (and me).
Now I have a concern of my own: if I ever put it down on my desk, will it go missing?
