Sony PlayStation Phone Could Face Hurdles

Regardless of whether the rumored Sony (NYSE: SNE  ) Playstation Phone is legitimate or not, analysts say such a device would face a tough task in overcoming iPhone and iPod touch's growing handheld gaming share.

The Playstation Phone, as it's being unofficially called, came to light with leaked pictures on Engadget. A phone combining the PlayStation gaming experience and a smartphone has been talked about for some time in the tech community. With Sony's connections to phone maker Sony Ericsson, it seems like a natural fit. Engadget also said Google's (Nasdaq: GOOG  ) Android operating system would power the device.

Sony and Google both said they do not comment on rumors or speculation.

Wedbush Securities analyst Michael Pachter is still unsure it will happen at all because of the risk it would mean for Sony. http:/img.ibtimes.com/www/site/us/images/1px.gif

"The only way this would work is if it was a committed handheld, multifunction device that could compete head to head with the iPhone. I don't see Sony making that bet. They struggled with the PSP, and now they're finally making money off it after some price cuts. They've invested billions in it, and it would take that much to embark on a whole new product launch. They'd already be lagging behind the iPhone and even the HTC Evo," Pachter said.

Scott Steinberg, an independent video game analyst that hosts the web series Game Theory, says any success with the PlayStation Phone would depend on the content. This would have to mean the inclusion of important PlayStation titles such as Gran Turismo as well as getting key independent developers on board.

"They have to aggressively court the third party development community," Steinberg said. "They have to make it inexpensive to develop, and they might even have to solicit a few key ones. It's not enough for them to have a few must own titles, Apple (Nasdaq: AAPL  ) is so entrenched that in order to shake them loose, they need to come out with a full scale assault."

Pachter says the device would be nothing more than a niche product if it just offered PlayStation games. However, he does say the notion of an Android-powered PlayStation Phone would make a lot more sense.

The idea of a Smartphone and video game combination is not new. Nokia came out with the N-Gage in the early part of last decade. The device was a failure for a variety of reasons, says Pachter.

"The games were expensive and few, and it looked like a taco. They had to make the thing big enough to play dedicated games, but the problem is, people like small phones," Pachter said.

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