According to the Nikkei business daily (as reported by Reuters) Sony is seriously looking at creating a new gaming cell phone with its partner Sony Ericsson. As an electronics firm, Sony has lost serious market share to Apple in the music space, thanks to the iPod and iTunes. And now the company's portable gaming business is coming under attack from Apple's iPhone and the App Store.

More and more game publishers, both in the West and in Japan, are offering games for the iPhone and iPod Touch. Sony's upcoming PSP Go, with its all digital distribution games delivery, may in part be a response to the iPhone, but unlike Apple's platform, the PSP Go is not an always connected device.

Nikkei's report said that Sony plans to set up a project team as early as July to develop a new device, which would combine PSP functionality with features from Sony Ericsson's mobile phones. And with Sony's plans to expand its PlayStation Network to all sorts of devices in the near future, having a PSP-like phone with constant access to PSN would seem to make perfect sense.  

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