A report from Bloomberg this morning has got the online gaming world abuzz. Bloomberg cites “two people with knowledge of the plans” who say that an updated PlayStation Portable, or PSP, handheld device from Sony Corp. (NYSE: SNE) will be introduced on January 27th at the Mobile World Congress in Barcelona.

Sony’s plans hit the newsstands at the same time that Nintendo Co. Ltd. (OTC: NTDOY) announced the US release date of its 3DS portable game-playing console. The 3DS has two screens, one of which provides 3D images that are visible without special glasses. Both devices follow the release late last year of the Xbox Kinect from Microsoft Corp. (NASDAQ: MSFT), which has sold 8 million units in its first 60 days on the market.

Can either the new PSP or 3DS put a charge into the video gaming business? We noted last week that hardware sales fell 16% in December.  Without new hardware platforms, the video game industry could go into a tailspin, and the latest mobile hardware could wreak havoc on the console business.

The new Sony PSP will reportedly take advantage of Sony’s networked entertainment offerings to allow users to share games, movies, and music among a variety of devices. The PSP 2 will be announced next week, but pricing details are not yet available.

A more interesting device from Sony could be its smartphone for gamers, the so-called Xperia Play or PlayStation Phone from Sony Ericsson, which is also set to be shown at the Barcelona show. The bad news for the Xperia play is that it will have to go up against the iPhone from Apple Inc. (NASDAQ: AAPL). The Xperia Play is based on the Android operating system from Google Inc. (NASDAQ: GOOG), and besides competing with the iPhone, the new device will also have to contend with devices, yet unannounced, that use Microsoft’s Windows Phone operating system which Microsoft has committed to as its mobile gaming platform.

The hardware makers seem to be choosing to focus on the mobile gaming market. New consoles may not be able to match the mobile devices feature-for-feature, although the Kinect has demonstrated that there are still legs to the console market. Maybe Sony or Nintendo ought to look at improving their console players as well.

As in just about all things technological these days, though, mobile is the key. The greatest technological improvements are being made in mobile devices. Smaller, faster, cheaper, more energy-efficient mobile devices could drive a stake through the heart of the console business. The new PSP, the 3DS, and the PlayStation Phone may battle among themselves, but for game consoles, the war might already lost.

Paul Ausick

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