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I don't think Sony can really do that. The Vita is a console that was clearly designed for console style gaming, and it's hard to do a complete 180 towards app style games. Besides that, why would a casual gamer pick up a separate 250+ dollar device for the same types of experiences I could get on my phone?

A Vita phone might be a better idea, but it would be awkward with the two joystick design. Unless they wanted to have a side talking N-gage like device, I'm not sure how that would play out.

Sony has to understand that a handheld console should NOT be a portable PS3 OR an iphone. To put it simply Sony needs to develop franchises that make sense on a portable machine. Experiences that are more robust than an iphone game, yet are enjoyable in short bursts. Games like Pokemon, Mario, Mario and Luigi, Kid Icarus Uprising, Brain Age, Nintendogs, etc, but with a heavier emphasis on realistic titles and action titles. More importantly, Sony has to do a better job in marketing their hand held experiences. Games like Papaton and Locoroco were interesting titles, but they took a backseat to potableized versions of God of War and Ratchet and Clank.