Is Sony About to Announce a PlayStation Phone?

Let’s see. Sony Corp. (NYSE:SNE) just shipped its last Walkman, the original portable music player that was just slightly larger than a cassette tape. If you don’t know what a cassette tape is, ask your parents.

The venerable Walkman hit the streets in 1979 and has sold more than 220 million units since then. Sony has never been able to duplicate the success of the Walkman, which was both a technological breakthrough and a cool product from the moment it hit the stores.

Now there is word that Sony and its phone handset partner LM Ericsson Telephone Co. (NASDAQ:ERIC) are about to launch a PlayStation Phone. The phone is thought to be using the latest version of Google Inc.’s (NASDAQ:GOOG) Android operating system and photos snagged by tech-geek web site engadget.com show a device that looks remarkably like Sony’s PSP go, a portable version of its PlayStation console device.

The most compelling question is not when Sony will introduce its PlaySation Phone, but “Why?” Sure Apple Inc. (NASDAQ:AAPL) is making more than 40% of its revenues from iPhone sales, and Google is installing zillions of copies of Android on handsets from Motorola Inc. (NYSE:MOT) and HTC Corp. among others. So where’s Sony Ericsson’s niche?

Sony apparently believes there is a gaming market based on cellphones. In Japan, again apparently, the smartphone/cellphone gaming market is very popular. The trick will be to do something unique with Sony’s PlayStation games and Ericsson’s phones.

So what are the chances that Sony Ericsson can succeed where others, notably Nintendo, have failed? 50/50 at best. First of all, to compete against smartphones the PlayStation Phone needs to be compact, but to be a better game platform than existing phones it needs to be bigger. Sony Ericsson’s solution to this is sure to please almost no one.

Second, gamers who just bought the PSP go also had to buy new versions of their favorite games. That will almost certainly be the case, again, with the PlayStation Phone. Sony, and the other game console makers, do this a lot. At some point their fanboys are going to rebel.

Third, Sony Ericsson needs to deliver the PlayStation Phone for this holiday season. The chances of that are slim to probably none.

Finally, a PlayStation Phone would have to go straight at the iPhone, and win. There is no chance of that.

Paul Ausick