The phone, according to the source, will have standard PSP buttons and a touch-based d-pad, eliminating the nub from the equation. This "gaming" portion of the phone will be accessible via a sliding landscape screen that measures between 3.7 and 4.1 inches. In addition to a baller screen, the phone will also "likely" have a beastly 1GHz Snapdragon CPU, which in plain speak, means that PSOne and PSP games are possible. In fact, the source says games being shown privately are from both of those platforms.
Engadget believes this to be more than rumor, but more importantly, the pieces seem to fit. Google wants in on the entertainment space and Sony no doubt wants to sell a lighter, smaller, and more digital-based PSP without giving away 10 games alongside purchases. Perhaps this is the reason why we didn't see that PSP2 unveil at E3, as was speculated heavily before the event, eh?

















EDIT: Man, I'm a douche.
Especially when these rumors abounded during development of the PSP?
I would rather they focus on games for the PSPAnything. :)
Unsurprised.
I would rather they dont keep pumping out fancy Playsation-related hardware that i cant afford
dissapointed?
Oh no, wait, no, no I can't.
If Sony Ericsson using Android is any indication, I think a Playstation Phone might be Android-powered.
EDIT: I think this is a good course for Sony to head towards. I don't think they can go in a straight pissing match against Nintendo in portable gaming. The PSP vs. DS proved that. Having a more network-connected gaming portable would be a nice sidestep against the 3DS.
This. A thousand times this.
Also the mock up from the other thread made me disbelieve that this could happen, but hey, there's a real possibility now. Android has been lacking behind in the gaming department. If Sony can push this out, we could see a surge in Android popularity. Part of the reason why iPhone has been so successful are the games that come on it. Android can duplicate that success, but with real games.