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PSP2 and the PlayStation Phone: Sony Competing With Itself

2010 was the year of the motion-controller. The majority of the year was spent speculating about Sony and Microsoft’s motion-controller offerings, while all of Q4 was spent sifting through the launch software and putting the hardware through its paces.

It’s becoming increasingly evident that 2011 will be the year of mobile gaming. The iPhone and Android smartphones are quickly gobbling up consumer interest with shorter, smaller, more simple games — made available ever-so-easily through the iPhone App Store or Android Market. These smartphones pose a major threat to Sony and Nintendo and their stronghold over the handheld markets, with portable consoles facing a serious chance of extinction due to the emerging mobile gaming scene, causing gaming analyst Michael Pachter to predict that the PSP2 will be “dead on arrival”.

Both the PSP and Nintendo DS have sold extremely well, but sales are fizzling out everywhere but Japan, where these handhelds remain a hot sell. To ensure that they stay relevant in this realm of the industry, Nintendo is preparing to launch the Nintendo 3DS. The 3DS is not just another upgraded version of the Nintendo DS. The shell of the product may look similar, but the specs under the hood are anything but. Couple that with a glasses-free 3D screen, a strongly supported launch line-up, and Nintendo has got themselves a real winner – with the platform holder boldly predicting sales of 4 million in the first month.

Sony, on the other hand, has been slower on the draw, and if recent rumors and leaks are anything to go by, the consumer electronics giant will be somewhat confusingly splitting their approach in creating another mobile gaming device.

The Sony Ericsson Xperia Play aka the PlayStation Phone

During the PSP’s five-and-a-half year life, fans have clamored for a PSP Phone (why, I have no idea, remember the N-Gage?). Leaked images recently surfaced showing that Sony has listened, and will be releasing a part-PlayStation, part-Android smartphone with slide-out controls similar to what has been seen on the PSPgo — Sony’s most recent redesign of the original PSP. The goal here would be to take on the iPhone and other smartphones head-on by offering a better, more traditional control scheme, utilizing Sony’s know how in terms of developer and publisher relationships and their wealth of first-party development studios, as well tapping into Sony Ericsson’s experience in the mobile market.

The “PlayStation Phone” would have instant appeal to gamers wanting to upgrade their current phones, but is it really enough for people to abandon their precious iPhones? Then there’s the point that since it is a phone, it would have to be tied to a major wireless carrier, which could limit the consumer reach significantly. Then there’s…

The PlayStation Portable’s successor, the PSP2

Sales for the PSP have slowed dramatically everywhere sans Japan. This is mostly due to the software offering; Japanese developers are still very much supporting the handheld in their native region. The rest of the world? “Not so much” would be the understatement of the year. 2010 may have seen some major releases on the platform with Metal Gear Solid: Peace Walker, Valkyria Chronicles and God of War: Ghost of Sparta, but for 2011, the only releases are, again, franchises that fare much better in the land of the rising sun.

Then there’s a little thing called competition. The PSP’s direct competitor was always the Nintendo DS, but with the Nintendo 3DS on the horizon, the PSP stands little chance. If Sony is to compete in this space, the Sony Ericsson whatever-it-is just wont be enough for many reasons: not everyone wants a phone in a gaming device, the games won’t have the level of depth to them that 3DS titles would offer, and smartphones are historically very expensive and/or tied to carrier contracts. A PSP2 would effectively negate any of those issues, and offer a more gaming-focused option more along the lines of what Nintendo is doing with the 3DS.

As for the PSP2 itself, if recent information is to be believed, the PSP2 will be formally announced on January 27th at a special press event in Tokyo, Japan (Sony is definitely holding an event that day, but no official reason was given) and it is said to be as powerful as the PS3. Photos leaked earlier in the year of a supposed dev unit show the PSP2 in a PSPgo-like sliding form-factor, two analog sticks, the usual face-buttons and D-pad, a touch-panel on the rear of the unit, and other odds and ends like rear and front-facing cameras and a microphone. Those last couple of features, namely the cameras and microphone, almost surely mean there will be some sort of voice/video chatting feature built-in. One rumor suggests that the PSP2 could “maybe even incorporate a phone, but not as a primary function”. This is where the confusion really begins to set in…

A PlayStation Phone and a PSP with a phone? We call it confusing.

Having two similar, yet very different products on the market is sure to confuse consumers. Aside from specifications (which aren’t official at this time), the fact that one of them is a phone is the only clear difference between the two devices, or is it?

The pictures leaked of the PSP2 show a rear and front-facing camera and a microphone, all of which are indicative of some sort of face-to-face video calling/conferencing  similar to the iPhone’s Facetime application. So, aside from the PlayStation Phone having 3G carrier data support, there isn’t much that it can do (from what we can tell), that the PSP2 couldn’t. It plays games and other forms of media and it makes calls, so why would one choose a PlayStation Phone over a PSP2? Or a better question might be, why would Sony make a device (the PSP2) that would make their other upcoming device (the PlayStation Phone) almost irrelevant? Or better yet, why would Sony make a device that competes with another one of their devices for market share?

In an overly crowded handheld market, pushing a new device will be especially risky, pushing two could be potentially suicidal. President and Group CEO of Sony Computer Entertainment, and Chairman of SCEA, Kazuo Hirai, recognises the issue, telling the New York Times: “We don’t want gamers to be asking, what’s the difference between that and a PSP?” He then continued, hinting at a plan to help inform consumers: “We have to come up with a message that users will understand. It would have to be a product that keeps the PlayStation’s strengths intact.”

Unfortunately, Sony’s track record with effectively marketing to consumers is rather spotty, so their message may not be entirely clear to consumers, many of whom know little about the finer details of the gaming scene. On top of that, resources and part of their marketing budget would have to be dedicated to explaining to customers the difference between a PSP2 and PlayStation Phone.

Sony. Competing with itself

The Sony Ericsson Xperia smartphone that has been dubbed as the PlayStation Phone has been completely dissected. Even without an official unveiling, we know what the specs are. On the other hand, we’ve got the PSP2 which hasn’t suffered from the leaks the same way the PlayStation Phone has, so we really have no idea what might be packed under the hood. According to industry sources, though, it’s coined as being as powerful as the PS3 by Sony themselves.

Anyone who strongly considers themselves a gamer would go for the device that is more powerful, more gaming-focused and more likely to stay relevant longer. That’s the PSP2. But that is going to take away from the gamers who would have likely bought the PlayStation Phone. In this economy, very few will own both. Making two devices aimed at the same audience is a bad business decision. Sure one could argue that there are a ton of different models of TVs out there — it’s nice to have choices. But these devices are far more than just a way to display content, they’re platforms for which the content will be created for. Significant investments are made by publishers, developers, even consumers to support not just the device itself, but the platform. No matter how you slice it, these two devices are going to be each other’s competition, and if one falls flat on its face, it may have already done damage to the other device’s potential userbase.

Timing might be the biggest culprit here. 2-3 years ago when the iPhone was first launched and fans were begging for a “PSP Phone”, the Sony Ericsson Xperia “PlayStation” phone would have likely been a major success. The PSP was far along enough in its lifecycle that a second device with different features could have been more interesting to consumers who did or didn’t own a PSP. It also would have likely kept the iPhone’s growth in the gaming sector at bay, but the moment has passed, Apple are increasing supporting the game market, recently bringing an update that included “Game Center” to create an achievements network for iOS devices.

At this point, the PSP2 is said to be revealed before the close of January, and the PlayStation Phone is still yet to be officially unveiled – possibly at the Mobile World Congress in February. Had Sony announced the PlayStation Phone during the Consumer Electronics Show earlier this month, and the PSP2 during E3 later this year, it might have been a more sound strategy. If the announcement of the PSP2 does indeed happen before the announcement of the PlayStation Phone, the PSP2 could completely cast a shadow over the PlayStation Phone, eclipsing it as a viable platform in consumer’s eyes. At least for gamers, which would be the target consumer for both devices. On the plus side, announcing the PSP2 in just two weeks time might be Sony’s best chance to steal some of the thunder that the Nintendo 3DS is generating. Either way, gamers, not Sony, will be faced with a choice.