Next time post a link to the source.
http://www.pocketgamer.co.uk/r/PSP/Playstation+Portable+2/news.asp?c=12612
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My take:
This is Nintendo and Apple's best dream. Sony could easily have got back into it by tying the PS2 and PS3 to the PSP better in terms of software and branding, and releasing lots of new games from all the IP they're meant to have, and making it more attractive to casual users via new titles that rip off e.g. Brain Training and Nintendogs. It wouldn't be honourable but it would work.
Instead, they are breaking compatibility? They'll be starting from zero install base and zero developer base during a time when launching new stuff is risky, and they still have no must-have titles to persuade non-PSP1 owners to get into PSP2. Sure, the majority of PSP1 users will upgrade. But that will leave them in a worse position than today when DSi (and iPhone) have years left in the lifecycle.
