Whether the PSP failed to take over the market from Nintendo, failed to drive UMD to mass market adoption, or ha low software sales, it is making money for Sony and does indeed have mass appeal, so yes, there will be a PSP2, whether some of the people in this thread like it or not.
If the PSP is a failure, then so is the Xbox 360. The latter sells moderately well in one region, poorly in Europe, and nothing in Japan. MS has managed to squander every advantage that it had by launching early and in due part lost its lead in less than a year. It lacks any and all mass appeal and is selling at a pretty slow rate overall.
To say that it "built an empire from nothing" is absurd. The 360 only recently started selling more than the first Xbox and it's still not turning a profit for MS. It may have good software sales, but that really means nothing in light of the above because all it's doing is making money for third-party developers, not MS. The PSP may have come short of Sony's expectations, but so has the 360 for MS. IT was supposed to have sold ten million by the launch of the PS3 and Wii, didn't happen. MS revised this to the end of 2006, didn't happen. As a matter of fact, it didn't do so until last summer. The 360 was supposed to gain a foothold in Japan and has thus far failed miserable in that department, and I'm sure MS had higher hopes for its sales in Europe, but it's dead last there as well with the PS3 even having higher software sales in that particular region. Despite falling hardware costs, the 360 has still posted a net loss and is just managing a profitable quarter which is most likely due to Halo 3. MS will probably post another loss next quarter after 360 sales drop off as spring and summer approach.
Even if the 360 does maintain its lead over the PS3 for the rest of the generation, it will still end up a distant, unprofitable second(a distant, unprofitable fourth if you count the handhelds) which is just what it was last generation. That being said, it's gone nowhere and is only still around because of MS's ability to pour money down a bottomless hole. I'd certainly hate to be in charge of that empire.
The PSP is the only console not made by Nintendo to have decent sales everywhere and appeal to all demographics whereas the 360 appeals only to the core and hardcore gamers in N. America. Software sales mean dick when you can't make money and two regions basically refuse to buy your product regardless of price or game library.
Edit: And like Kirby007, I'd like to see some sources for the PSP doing worse now than it was in the beginning.
Consoles owned: Saturn, Dreamcast, PS1, PS2, PSP, DS, PS3
