Prepare for the PlayStation Phone?

Will Sony (NYSE: SNE  ) PlayStation gamers interrupt Call of Duty to call grandma? Tech blog Engadget has rolled out a snapshot that it claims depicts Sony's upcoming PlayStation Phone.

Supposedly the fruits of a joint effort between Sony and mobile partner Ericsson (Nasdaq: ERIC  ) , the device in the photo features the obvious slick touchscreen interface, with gaming-controller buttons in a convenient pullout.

According to Engadget, the device will be yet another mobile handset powered by Google's (Nasdaq: GOOG  ) Android, though the gaming aspect and controller will clearly differentiate the phone from other Android-powered handsets.

If the picture's for real, is Sony too late to this game? Rumors that video game console companies would get into the smartphone market have been bandied about for years. Xbox parent Microsoft (Nasdaq: MSFT  ) has been slow to move in this space, and it's been in the mobile operating system business for some time.

Maybe Microsoft is wise to tread carefully. By entering the crowded smartphone market as an Android device, one assumes that a Sony PSPhone would also run the growing number of free or nearly free game apps that are available. Wouldn't this devalue the full-priced PSP and PS3 games Sony presumably hopes to sell to this platform?

That value disparity is a good reason for Sony and Microsoft to drag their feet, but the rising popularity of smartphones is already eating into the market for traditional game consoles. Hardware and software sales have been sluggish for nearly two years.

Apple (Nasdaq: AAPL  ) may have disrupted the industry's pricing power when it rolled out its App Store during the summer of 2008. Research In Motion (Nasdaq: RIMM  ) and Google's Android have followed suit.

If Sony can't beat 'em, it may as well join them -- or at the very least, phone it in. According to Engadget, the PlayStation Phone may hit the market by year's end, though an early 2011 release is more likely.

How many young gamers can afford the costly data plans that subsidized smartphone contracts require? Could Sony make up for lost time with a PlayStation-friendly handset? Or is Engadget's image just another piece of Photoshopped vaporware? The next few months should answer most of these questions.

Could a Sony Ericsson PlayStation Phone take off? Share your thoughts in the comment box below.

Google and Microsoft are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz doesn't even know where his PSP is, though he does use his PS3 often to stream movies. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it knows that roaming charges weren't billed in one day.


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