I think Sony's only failure with PSP was UMD. It tarnishes battery life and makes the system a little to bulky. However I can understand the decision because some users do wanna play epic style games on the go and it was probably the only cost efficient manner of delivering such an amount of data at it's release when memory sticks and other SD cards were more expensive.
Lack of truly portable games I wouldn't blame on Sony. They and a few others are trying, Patapon, Locco Rocco, Exit, Crush, Lumines.
For the PSP2 I'm hoping they ditch the UMD drive for 2 to 4GB memory sticks holding the data for games( I would think they would be cost effective by then and it gives Sony another way to plug their proprietary format). Hopefully with the ability to download titles we will see more developers making new,fun, and simple PSP games because of lowered risk. Successful titles can be shipped to stores to bring about even more success.
It may have taken a lot of financial pain but I do believe Sony is learning from their mistakes and making strides that will inevitably increase competition. First go 30-33% share maybe a 40-50% next go around.
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