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No, I think there's plenty of room for one, but it needs to be very different from the home experience to separate the two. As it is, the PSP is basically a very watered-down console.

I agree with that part. At the end of the day though, they've sold a lot of them and presumably it's profitable so why abandon it? The bigger issue is game sales, outside of Japan anyway. For a system that's sold over 56 million units, the game sales are dire.