You mean franchises like Metal Gear, Resident Evil, and Final Fantasy?

Well, darth, let's look at it from several angles.

1) The focus of the product

Sony's typical approach is to combine games with multimedia features. Nintendo has an incredible strong first party when it comes to portable games while Sony had nearly nothing at all in the past almost six years. What carried the PSP was the third party support and that seems to have gone to Nintendo now too. Then there's Apple who doesn't only get third party support but also happens to have devices that are popular for their multimedia features. Sony is facing an uphill battle on both fronts and it's going to be even tougher in case they lose Monster Hunter to Nintendo as well.

2) The timing of the product

The 3DS is going to launch this fiscal year which means that a possible PSP2 at the very best launches in the same timeframe. Sony has no chance to get a headstart with their product and even worse for them, the 3DS is garnering lots of attention for its 3D feature without the need for glasses and one of the most promising lineups in video game history.

3) Sony's game division is still struggling

While the PS3 has rebounded since the Slim launch, it's still not out of trouble completely. The game division hasn't made a profit for a full fiscal year since a long time. R&D as well as games development for new hardware is extremely costly, not too mention the marketing needed for the launch and beyond. Now considering how hard it's going to be for Sony to compete against Nintendo and Apple, the question is if that investment is going to be worth it or if Sony is better off by focusing just on the home console space from now on.

4) 60m PSPs sold sounds impressive, but how much did Sony profit off of it?

The handheld was sold at a (big) loss initially judging from Sony's financial reports. It always had problems to move software which is where most of the profits come from in the video games business. In the end the PSP might just have made a few hundred million $ for Sony. That doesn't sound too bad, but keep in mind that the PS3 and PSP were launched at a time when the PlayStation brand was at its peak. A PSP2 and PS4 won't benefit from getting all the third party support which will make it harder for Sony to move hardware in the next generation.

What it comes down to is whether or not Sony's first party is capable of pushing two systems at the same time and if the PSP and PS3 are anything to go by, then the answer is no.

Lastly, let me say that I would like to see Sony make a PSP2, because it's going to do more harm than good for them.

You mean franchises like Metal Gear, Resident Evil, and Final Fantasy?

Sony's in a tough spot in the handheld space. Nintendo has roped in Sony's 3rd party support and Apple has completely eclipsed the PSP as a convergence device and in digital distribution. I suspect kowenicki's right and Sony has gone back to the drawing board, because they need to find a third way that can differentiate themselves from these two mobile powerhouses.

It's time for Sony to get a little crazy and some risks. Whatever they come up with will have to be something that nobody is thinking of right now.

WHich will be on PSP2 as well when it launches.

They better come out with some serious s*** to compete with the 3ds is all i have to say.

WHich will be on PSP2 as well when it launches.

Sure they will be on the PSP2 but by that time they will have already launched on 3DS, so surely that would hurt sales to the extent that they would only really be bought by the "Sony loyalists". Not sure how large a market this would be.