Depends on how you define "fail" or "dead on arrival." I would define both as the PSP2 selling so bad in comparison to the 3DS and smart phones that Sony will not create a PSP3.
From all the "rumors," a price point of $299 or $349 will leave many US consumers thinking "why for $100 or $50 more I can buy an iPad and have a multiple use device instead of a single use, gaming device?"
Common sense here, the consumer is not stupid and never has been when it comes to luxury goods. Sony with the PSP2 will have to justify it's price point beyond "rivaling PS3 graphics." If it is going to sell it is essentially going to have to have Internet capabilities comparable to the iPad, high definition movie steaming via NetFlix and Hulu, and a high pixel in-built camera.
If the PSP2 is released mainly as a gaming device at a price range over $250, I believe it will be the last hand-held Sony will create because of a lack of sales due to competition with Apple's iPad, the Google Android, the Microsoft Windows 7 pad computer, and the Nintendo 3DS.
People forget that when the 3DS and PSP were released in 2004-2005 the hand-held market was completely different. The iPhone was not even out yet and gaming on cell phones was in it's infancy. Fast forward to 2011 and 2012. Sony and Nintendo are facing a market where the competition is much more varied and not a red ocean between Sony and Nintendo.
