Looks like they took one look at the Ngage debacle and have learned the right lesson. Make your device unique and extremely good at it's job rather than a jack of all trades that isn't that that good at anything. A gaming device could never compete in the smart phone market imo.

You have a point.

Sony should make a Xperia like they did, but with NGP games, graphics and features,

Something is seriously wrong with Sony,
Stupid statements like "lulz we don't compete with 3DS" aside serene insight such as in this article. Looking at the games coming for NGP, against ones coming to 3DS, boosted by this healthy and fresh (in Nintendo world: normal) attitude, Sony has locked down my 8th-gen first portable.

Yeah good job Sony!

EDIT: Maybe Sony has a point. I wouldn't even have room for an iPod Touch on the go, let alone a NGP. I have my wallet in one pocket, my Android smartphone in another. Even if you have a cheap small dumbphone, you'd have to have a bag or jacket with you to put a second handheld. And these days to be honest I don't bring my PSP with me as often anymore because it's more of a hassle to play PSP games on the go when I can just play a fun game (even something meaty like a jrpg) on my smartphone. I mostly play my PSP and DS Lite in the home and at home and prefer gaming on handhelds to a home console anyway since it's more convenient. So maybe Sony is on to something.

But changing the hardware to fit the phone would require additional changes, that would make it hard to just have it be compatible with the current setup. And making it smaller would also make it worse as a gaming device, because the controls become more cramped.

Instead of trying to make the NGP a jack of all trades, Sony is specializing it to be a very good gaming machine. This is what will keep it going long after smartphone users move on to the next hardware.

Would they even consider making one given the hacking-allowed status of mobile phones?

I agree. Smart phones will be the dominant form of mobile gaming. That is not to say handhelds such as the ngp can not be successful in their own way...

I'm not sure how feasible this is but Sony could have included a dual-boot in NGP with a choice of two operating systems when you first boot it up. You could have a proprietary Sony OS dedicated entirely to NGP/PSP gaming or you could boot into Android OS for everything else (including playing Android games and Playstation Suite Android games). I've never tried dual booting on a computer or anything myself but apparently lots of people do it. And then they could release a smartphone NGP model at a comparable price and contract to the iPhone, a 3G "Android Touch"  NGP for $300 US plus and a Wi-Fi only "Android Touch" NGP for $250 US.

They'd have to slim down the NGP to make it smartphone sized though and it would have to use less powerful tech to keep costs down at a smaller size.

The NGP smartphone/Android Touch idea might be a bust though. Who knows. All I know is there's no way a 5" NGP with Sony's OS is going to be anything more than a niche device outside Japan. Most Playstation gamers want to play PS3 games on a home console, not in watered down form on a handheld. Sony and Nintendo are lucky that the Japanese have shifted towards gaming handhelds in a big way. In the western market, however, the home console market is strong but the dedicated game handheld market is being eroded by smartphones and the iPod Touch.

I'm looking forward to seeing what the NGP can do since I'm not exactly enthused with the 3DS in the way that I was with the DS. The 3DS costs like $100-ish to make and Nintendo charges $250 for it. At least with the NGP, you'd feel like you're getting your money's worth for $250. Nintendo thinks they can justify the $150 markup riding on the coat tails of the Blue Kitteh hype. But the games have to measure up to. I have faith they will. The PSP momentum is very strong in Japan so you know Capcom, Square-Enix, Namco Bandai, Konami, Tecmo-Koei, Atlus, Marvelous, NIS, etc. are going to bring a lot of support to the PSP successor. Western third-party devs are mostly not even going to give a damn about Nintendo or Sony. They'll be shifting over to the smart devices. That's where the real money is at for them at this point.

Dual boot would be the only acceptable solution on the software side, requiring users to shift OS for doing certain things would mean a compromised experience overall. And creating an NGP at the right size to be usable as a smartphone would require way too much compromise in hardware terms. People already complained about the PSPgo being too small, so trying to fit dual analogue sticks into something in that general size wouldn't make for a good enough experience.

All in all, trying to make a smartphone version would compromise the NGP experience and so Sony are better off trying to make the NGP as good as it can be.

Personally, I think Sony have the right idea with the NGP. Make a portable device that does gaming in a way smartphones can't compete with. And all their games are designed to be portable friendly, and not just home console games in the palm of your hand. Sony have said over again that they learned that lesson with the PSP and I think it's showing.

WipEout is a natural fit of course, grab a race here and there, and Reality Fighters, Little Deviants and Sound Shapes all look like very portable friendly games. Sony Bend have said they are developing Uncharted: Golden Abyss with portability in mind, and are trying to make it a good fit for the platform, rather than just an NGP version of a PS3 game.