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OneTwoThree said:

Do we actually have any confirmed info about PSP2 yet? So we don't know what it does, but we're betting on how well it will sell?

Anyway, I think Sony is in a difficult situation. I'd describe their systems as being conservatively designed, but powerful. Kind of the "brute force" approach. If your competitor has a strong novelty feature though (and you don't), your system has to be extra powerful to still convince buyers. If Sony decides to take that route, the PSP2 would be graphically impressive, but plagued by the same problems as PSP1: High price, low battery life. 

The other option would be inventing their own unique feature(s). Maybe putting a stronger emphasis on media center / communication features than Nintendo does? Something completely different? 

Simply copying Nintendos key feature (again) is a bit harder this time: Touch screens have become the de facto standard in media devices (smartphones, tablets, game systems), so Sony probably wants to have that. But on a one display device, a 3D display won't go well with a touch screen. I bet that this is the one problem that keeps Apple from putting out a 3D iphone, btw. So Sony will have to choose what they're going to adapt, touch screen or 3D?

Tricky. They'll be fine, I think, after all there's a market for Sony style games, and their IPs have a strong following. But beating 3DS? Not without an own big innovation on their hands, I'd say.

EDIT: Wouldn't it make sense if Sony dropped the UMD and switched to cartridges instead? 3DS cartridges are rumored to be up to 8GB in size - far more than the clunky, battery-consuming, easily breakable UMD. 

Well, the prototype for the PSP2 has the touchscreen on the back, so Sony could still persue a glassless 3-D screen if they wished.  I don't think they will, though, as it would add even more cost to what is most likely going to be a powerful handheld (read costly).  If the PSP2 is powerful enough, they could try going for passive 3-D with glasses.  I am curious how that back touchscreen will work, though.

As far as the UMD goes, I don't think the prototype even had one.  Could be wrong, of course.  If Sony is going UMD-less, they definitely need to put in place some method for putting PSP games on the PSP2.  Well, other than just buying and downloading them again.  Otherwise, they are going to lose some customers for not having a well thought out BC model.  One of the contributing factors to the failure of the PSP Go.