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Onimusha12 said:
I see Sony taking the PSP to cellphone gaming with the PSP2, it will most likely focus on competing with the iphone / cellphone market breathing new life into cell phone gaming.

I don't really see it. How would they make the form factor small enough for a phone? The current PSP is like twice as big as an acceptable phone. If you make the screen smaller, much of the graphics advantage gets wiped out. If you make the controls smaller, it will cause people fits. It would also require abandoning the UMD drive.