I dunno I don't think Sony is giving up on it without a fight.
I mean as Dille said piracy has pretty much killed the software market on the PSP. I mean out of the gate I remember day one the thing was hacked, before it launched in North America it already had an emulator and people could download roms. That was day one. I know people who bought PSP's and downloaded movies and games illegally instead of buying UMD's. I of course verbally denounced their activity but I don't think I knew infact know of a single PSP user other then myself who actually buys games. Over the past I've know about 15-20 PSP owners and as I just said not one actually bought software.
So Sony games barely sell, 3rd party games barely sell. Sony has continued supporting PSP despite the low sales. I mean the console is in 61-million homes and the biggest games barely break a million copies sold. I think the PSPGo was an attempt by Sony to reverse the piracy trend and make a new console which they could sell online content for. I think Sony was also hoping to cut manufacturing costs with PSPGo so that their games would be more profitable. Sony thought PSPGo would be a revolution and that people would buy it and switch to downloadable content based on success Apple was having with selling its DLC.
Now that Go and the 3000 are starting to die. Sony is still supporting it. I mean seriously how can you be upset when first party software continues to launch despite Sony knowing very well that the platform is dead. Marcus was an attempt to put a new and younger face on the PSP brand. This was a horrible attempt but I believe Sony meant well.
Now with the PSPhone the rumoured PSPad and the PSP2. I think Sony is trying to expand the PlayStation brand to compete with the I brand from Apple. They failed to directly take on Nintendo so why not expand and take on Apple at the same time. Sony already has a phone brand and computer brand why not expand PlayStation into those brands to better take on the new biggest threat (Apple).
Now do I think this is the right direction to go in? No I don't. I think Sony is acting like Germany did in WWII, they weren't beating the allies in the west so they descided to take on the East and the rest of the world. Essentially taking on three fronts at once instead of concentrating on one.
However maybe Kazou Hirai and Jack Tretton are smarter then Hitler. Maybe they can successfully take on three fronts (Nintendo, I-Phone, I-Pad). I for one will buy a PSPad and I'm actually contemplating a PSPhone if my carrier carries it. I think Apple could do great things by looking outside the conventional box. Rather then seeing the PlayStation brand as just a gaming brand they could expand it into other markets. Its a gamble but it may just work.
Also the PSP has only been around one generation. its loss is no greater then when Sega lost GameGear. Now if this was their third generation in the handheld market I'd be sad but honestly they have a choice, adapt or die. If the PlayStation brand doesn't adapt to compete with Apple, then eventually Apple will come and kill them off or contribute to another competitor killing them off.
I wish Sony luck in taking on Apple.