This, my friends, is a PSP Go

Do you see this? Some people see it as a failure on Sony's part. Some see it as the first mainstream device to go all digital. But do you know what I see?

I see a phone. I see what could be an amazing phone. And no, I'm not referring to the Xperia Play. The Xperia Play failed on multiple fronts. First of all, it was Android. I've said it before on these forums, but as long as Sony Piggybacks on Android, they won't have the security they want in their PS4 connectivity. They won't have that same fluid ecosystem as if they were to make their own OS, and thus a new platform of phone. Having a PayStation OS would in no way be an attempt at Android or Apple. It would be a platform that Sony has full, free access to and could potentially license other manufacturers to make phones with their OS. Not only that, but instead of simply having an app to access Sony's store, you would simply log into the PlayStation Store. A new storefront would open up inside for apps, which Sony could easily procure through many of its own in-house developers or through people simply trying to get a piece of the PS4 phenomenon. 

The benefits of having their own OS to run phones and tablets on would open up a whole new market to Sony, and using the PlayStation name would certainly get them off the ground. They wouldn't even really need to make one- The Vita's OS could simply be modified to run in portait mode and it wopuld be the perfect way to have a Phone OS that both looks new and feels familiar. Toss in one of those new X9 chips (unsure of the name, but it's apparently as tough as a Wii U?) and you'd have a phone capable of native Remote Play, PS Store access, and the ability to play many existing games on the PSN. With exclusive Vue access (as soon as the service ACTUALLY launches -_-) and added PS Now, Sony could poise themselves to be making money in mobile, too.

Back to the other problems of the Xperia Play, however, it was also terribly ugly. Look at this thing:

Ugly as sin. Bad coloring, sharp angles, numerous facebuttons for the phone, and that operating system. Don't get me wrong, I love Android- but a Vita OS would look better. The biggest glaring problem is the lack of real analog sticks, and the PSPgo has a similar problem. The proposed Playstation Phone would need two real sticks ala PSV, and it would need 4 shoulder buttons like the New 3DS. The touch screen would obviously remain, but all other aesthetics would be closer to the PSPgo.

I feel like the PlayStation Phone could finally work. With this new processor for mobile platforms and the PlayStation ecosystem as it is, there's almost no way every Playstation fan wouldn't be looking for a PlayStation Phone in 4', 5', and or 6' inches.

It would also definitely need to fit in the Pipboy. Definitely.

There will never be an xperia play that doesn't use android, and I wouldn't buy it if it didn't use android. I would love to see a new xperia play that has a full fledged PS OS, but I would still want android.

If Xperias and Vitas don't sell now, what makes you think a combination of both would?

Unless a phone is Apple or Samsung, it's going to have a hard time selling. Phones are about social status these days. Fan service alone, is not enough for a company to stay afloat on (ala Nokia/Sega)

You really think Sony has the software expertise let alone the financial capital to make their own operating system that comes even close to Android or iOS? Its not something they should even consider until they're better off.

android is good enough, just find a way to get the analogs and buttons to work, while looking classy enough to be mainstream and they are gold.

of course that's the billion $ question, right? how to make something looking like the current xperia Z line plus adding the physical interface? if I knew the answer to that question i would be able to retire this year

it wouldnt matter because they get the roaylties from the games sold and probably apps in general somthing like 10% for each dollar.

if those would be vita numbers they would make more money than with the PS4

they dont get the roaylties from adroind store sales if there are any, thats why the Smartphone bussines dont make them any money

I think Sony is going to do this, but not in the way you are describing (kinda the opposite).

I'm betting that eventually there will be a PSNow App that you can download to your phone, and then pair with a controller. So instead of producing the hardware they'll leave that to Samsung/Apple and just make money on the subs.

They will also have to pay money to M$ and other patent holders to make each phone. It's not going to be a free venture. Also, considering Vita software obviously isn't flying off the shelves, where is this revenue coming from? They will have to pry people off of their Apple, Android and Windows apps to make money off of apps. Their only chance to survive in the cellphone space is to join either Android or Windows. Look at what happened to Nokia, they were a tried and true cellphone company. Their OS couldn't hang anymore and they got left behind. Blackberry shared the same fate. Those two were big dogs

Running their own OS means it will have no apps, and be a really unattractive proposition.

Sony have sacrificed a lot to turn the ship around. They have let thousands go, closed down Sony stores, spun off the vaio laptop division and sold several buildings. The key areas they make profit in are gaming, subscription, music, film (usually), devices (camera sensors for Apple etc) and finance. They are moving away from making products, which has very small margins and towards making software, music, other less tangible goods that have a much larger profit margin.
The mobile area is very difficult for Sony as only apple and Samsung dominate and benefit from economies of scale. They get all the profits basically while the rest get the crumbs.
Sony's best bet is to just do apps that they can generate profits from and bring it to the AppStores. Psnow is probably going to come to phones once they have a good control method worked out.