I suspect that Sony envisioned the PSP as a device that would have the popularity of the iPod with the recurring revenue stream of the Gameboy Advance, and designed a device to suit both uses without any (real) consideration of how well it was suited to compete against each device on its own. Neither Apple nor Nintendo stood still, and when they both released devices which were dramatically different (and arguably dramatically better) than the device that the PSP was designed to compete against the PSP never found much of a market.
Certainly, the PSP sold a lot of units; but a lot of this was driven by people who never intended on buying a game or a UMD movie and this meant that the PSP couldn’t materialize as the product Sony envisioned it becoming. This is one of the main thing that makes me wonder whether Sony would bother with a PSP 2.
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