The difference is that we can easily try to pretend that game consoles are not general purpose computers. And doing so is not going to cause issues to the fabric of the society.
Meanwhile, a game system with no games is not functional at all.
Might want to reconsider your argument here.
The first iPhone technically wasn't a smartphone (unlike its competitors at the time) because it did not have a way to install third-party programs. This situation only lasted a year though.
It did have a pre-installed Google Maps app, very much not a toy...
And don't game consoles typically come out bundled with some first party games too ?
What a laughably wrong assertion. The iPhone handled all kinds of PIM data and synced with computers. There was no requirement (or even expectation) that a "smart" phone had third-party applications.