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In order to understand what the PSP was supposed to do, you first have to figure out "Why didn't Sony enter the Handheld market before and why did they decide to release a system in 2004?" I have heard it suggested that the iPod was the main reason the PSP was created. Sony (a company that dominated the portable music player market for a very long time) simply didn't see the iPod comming, didn't see the need for a hard-drive based music player and focused on pushing their own music format (mini-disc). The PSP was supposed to take one of Sony's strongest brands (Playstation) and to use it to reclaim their lost dominance in the portable music industry.