Thanks to the iPhone’s internal OpenGL ES 2.0 graphics capability, Epic has no reason to hold back from porting their Unreal Engine 3 (the same engine that runs mega-games BioShock, Gears of War and Mass Effect) to the iPhone 3Gs and iPod touch (3rd gen). Do you know what this means!? Soon Apple’s little genius devices will turn into real portable game machines. Not that they aren’t already gaming machines; but the integration of such a powerful graphics engine backing future games should definitely give the Sony PSP and Nintendo DS a chill down their spines. Check out the video above for a quick snippet of Unreal gameplay and look forward to the iPhone and iPod touch becoming synonymous with “portable gaming machines.”