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Sony is considering developing a Playstation cell phone hybrid in a bid to better compete with Apple Inc’s highly popular iPod and iPhone, the Nikkei business daily said on Saturday. It’s no secret that in the USA the iPhone has become a powerhouse despite its lackluster presence in Japan. Perhaps this is the only way for Sony Ericsson to truly have a dominant presence once again. Many people say that the iPhone is nothing in comparison to the PSP, but it is the most perfect marriage of communication available at this time, offering great spontaneous play (Tiger Woods, Peggle, etc) and good over all quality in gaming .

Sony plans to set up a project team as early as July to develop a new product that combines functions of its portable game player and Sony Ericsson’s mobile phones, the Nikkei said. What do you think should be in this phone? I feel that the perfect Playstation phone would be

Engadget has further musings and interesting comments about the PSP phone, as well as Gizmodo.

Image used for story is not an actual image, but a mockup. A good one, at that.