The PSP is getting long in the tooth, and its competitors have shown their cards. If Sony wants to remain a player in the portable market outside of Japan it will have to release an upgraded PSP soon, before Nintendo and Apple accumulate too much momentum.
All the rumors point to the 3DS having GameCube-level graphics: this is a major problem for the PSP, which is a player in the handheld arena almost exclusively because of its superior graphics compared to the DS. This, in my view, means that Sony more or less has to release a PSP2 with at least sixth-generation-console level specs: a facelifted PSP with more features but no change in graphical capabilities will be demolished.
It's also going to need to become a true multimedia/productivity device, because Nintendo isn't Sony's only competition. It needs a touchscreen to compete with the iPod/iPhone/iPad, of course, but it needs more than that: it needs an app store. The PSP2 needs to do everything (or almost everything) that Apple's trio of mobile devices can do, or it will hemorrhage potential customers and pocketspace. Apple fans will always be Apple fans and there's not much Sony can do to win over that crowd, but it absolutely needs to compete for those customers who view their handhelds as multimedia/productivity devices first and gaming devices second. If the two devices are tied for overall utility and the PSP2 offers a vastly superior gaming experience it will do well - if the PSP2 offers a vastly superior gaming experience but inferior utility it will be a failure.
There is only one mobile platform that can compete with Apple when it comes to apps and overall utility: Android. If Sony comes out with a PSP2 with a closed-garden app store it will bomb: look at what's happening not only to bit players like Palm but also to mobile heavyweights like Blackberry and Nokia. A PSP2 running Android would be able to run apps developed for the wider Android market (with the possible exception of games, access to which Sony might see fit to block), which would allow it to compete effectively with the Apple triplets.
The other arrow in Sony's quiver is going to have to be backwards compatibility, ironic considering how lacklustre their support of it has been this generation. But it's an absolute necessity - access to the tremendous library of prior-generation PlayStation games is what is going to sell the system to gamers cross-shopping it with the 3DS and iShit. UMD is dead and it's not coming back: digital distribution is going to be the only way to get games for the PSP2, whether we like it or not. But Sony is going to have to get its act together on this front: an unacceptable number of PSP games are currently not available through the PlayStation Store (see: Final Fantasy Tactics: The War of the Lions).
The ability to play PS1 games goes without saying, of course, but why not PS2 games as well? Call it wishful thinking, but I can't believe Sony doesn't realize it's sitting on a potential cash cow when it comes to PS2 emulation on its existing systems. Sony needs to develop a workable PS2 emulator for the PSP2 (and reintroduce PS2 emulation on the PS3, for that matter), start putting games on the PlayStation Store, and watch the money roll in.
Thoughts?
