Maybe others online and in the press have said this but I finally figured out why Sony came out with the Vita even though the market for such a device is shrinking. If anything, the general thought was that Sony should have already come out with a PSP smartphone by now or released the Vita as a smartphone instead of just as a gaming portable.

So why didn't Sony do this? In October of 2001, Sony created a joint venture for cell phones with Swedish telecommunications company Ericsson. While details of the deal are not public (to my knowledge), like many other joint ventures, it is very likely that Sony and Ericsson agreed to terms that block each individual company from competing with the joint venture. In short, if Sony wanted to make a PSP smartphone, that smartphone would have had to be a product of the joint venture. In the case of the PSP, that would mean that PSP intellectual property would need to be transferred to the joint venture (read: Ericsson would own 50% of the PSP intellectual property).

Of course Sony would never let Playstation IP to be transferred or even sold to some other company considering that Playstation is the only consumer product that currently makes an occassional profit. Fast forward to October 2011 (10 years -- yes, the deal probably had some 10 year "out" clause) and we have Sony spending about $1 billion to buyout Ericsson's piece of the joint venture. So that would mean a green light for a Sony Vita Phone, right? No, because the Vita portable is already designed, is already in production, and has a release date. More importantly, Sony has made promises to game developers about the release and plans to support and market the release. That is, the Vita has to come out.

You may ask that if Sony was going to buy Ericsson, why not design a phone and release it as soon as the deal is done? Primarily, Sony is really a collection of very independent divisions of which Sony Computer Entertainment (SCE) is just one. They are charged with creating their own business plan and their own profits (hence the lack of interoperability with products from Sony Electronics). Since the PSP was released in 2005 and its revenues were waning, SCE had to move forward with a product and was probably not able to predict that any deal with Ericsson was even going to happen -- $1 billion is a lot of money. Also consider that any leak of a PSP phone being in development at SCE would have given Ericsson more leverage in the buyout negotiations. So SCE was probably told to not do any smartphone design.

You can fill in the rest of the details as to why the Sony Ericsson Xperia phones came out and why SCE would only allow PS1 games to be released for Xperia. And yes, I strongly believe that a smartphone based on Vita technology is being worked on somehow at Sony now that the joint venture is history. I think that we will hear about this product this year and that Japan might even get this product this year.