I have been watching the reception of the cloud update for the Portal and a lot more people are buying it thanks to it, some are even buying it as their first PS5 experience. A lot of people are really liking the cloud experience, my country doesn't have cloud LOL so I can't test but it really sounds like he days of worrying about making specific games for the portable console are over. The thing is going to run ps5 games native and the ps6 games it won't run are most likely going to be playable with cloud.

It really makes sense to release one.

If I have to guess I say that yes there will be cross gen games the first couple years like with the ps5 because of the economy and because thanks to covid many projects designed for ps5 will release when the ps6 is already out. When the time comes to go full ps6 they can either release an updated hardware or cloud.

A handheld to play PS5 games is pointless now.
It would not have it's own games and you won't be putting your discs there.
So it's a PS Portal that can download games to play last gen games (by then) and that you can't play your disc games into.
If it can play PS6 new released games, meaning from now on console games are full PC games with low quality modes that can be upscalled with PSSR2, then maybe.
Even so, people woule rather enjoy God of War 6 on a big screen rather than that.
The Vita failed for a lot of reasons, and one of them is that people don't want compromised versions of the high profile games, they want either a new thing or a proper high profile game.

People are buying those compromised games on Switch. Vita failed for the AT&T model. High price for the time. Poor marketing. Sony not supporting it and high memory card prices. 3DS stumbled as well due to a high price. They reduced it.

The idea of handhelds having their own games is now very dated.

For one, PS Vita conditions of failure are different because it needed dedicated software support to exist. Dedicated software requires a high userbase for that software to make a profit on. A derivative portable PS5 SKU wouldn't be deemed a failure if it sold Vita hardware numbers (15m) as developers do not need to build games from the ground up to support it.

Additionally you couldn't possibly compare Vita's software situation to that of a portable PS5. Vita didn't just have "compromised versions" of high profile games, it had entirely different games of way less quality and appeal. Even then it lacked the vast majority of IPs that made playstation a success: no GTA, Monster Hunter, Final Fantasy, Grand Turismo,  God of War etc. If it literally ran all the big games released in 2013 like GTA5, GT 6, ACIV Blackflag etc aand offered the same expoerience at a lower resolution, then we'd be able use it to correlate with the appeal of a potential handheld PS5.

As far as compromised experiences, the Xbox Series S is 40% of Xbox Series sales, clearly there is an audience for "compromised experience" if the trade off is worth it. Portable gaming does has an audience, especially in developing markets. Sony just wants to have a presence there and give gamers new options, I doubt they'd be expecting it to sell 50m units or anything. 

Also I don't think anyone expects the PS5 is going to be abandoned at the arrival of the new generation. Games development is getting longer, more expensive and very few developers are actually able demonstrate clear generational leaps, to the point that Sony is happy to use a PS4 game (TLOU2) to promote its new PS5 Pro console 4 years into the generation. If this gen saw a 2-3 year period of cross gen across almost all big titles, next gen will be 4 years minimum. Everything points to the going on to be the longest generation we've seen and potentially the end of clear cut generations. Scalability is an increasingly bigger part of engines and dev focus, also because the PC market is an increasing important for AAA development and most people do not have high-end PCs.

I think this is still very much a RnD project that can be cancelled if the tech doesn't pan out as expected. Fundamentally they need a device that can run PS5 code without any significant optimisations from dev side whilst also being affordable(<$600) and having decent battery life.

In my head a timeline could look like

Holiday 2027- PS5 Portable
Holiday 2028- PS6

I'd expect almost everything to be cross gen for the first few years of PS6's life, probably 60fps modes, actual 4k image quality and decent raytracing features will become exclusive to the new gen. Some games may launch first on PS6 but if there's an audience they'll be ported to PS5/PS5 portable (think hogwarts Legacy)

Sony has now also confirmed the 160M PS2 number and updated their website showing this.

I figured the "in memory of..." PS2 that claimed 160m+ sales had to be real after the similar PSP/PS3 showed up from more reliable sources, so I'm not surprised.

I'm glad this is finally confirmed. I feel like the next first party sales update we're going to get is GT7, and Sony officially confirming the franchise has surpassed over 100M+ units sold. 

I think the biggest issue with the Vita is that it didn't have many of the big games. 

When you look at the best selling PSP games, there are Grand Theft Auto, Gran Turismo entries. A lot of these were some of the biggest franchises at the time, and they had (at least timed) exclusive PSP versions. 

Most of these franchises were outright missing on Vita. Vita's biggest representation was the worst rated CoD game of all time (and Minecraft at this point). 

I don't think it had anywhere near enough support to sustain a console. 

I would say though that expectations will be different. The Vita had to sell enough to be worth making games for. If the next one plays PS5/PS6 games, then it doesn't even need to sell as much. There's no risk for making a big game for it. 

It largely just needs to beat out the R&D, manufacturing, etc of the hardware itself. Whereas before, Sony would need to be cognizant that they were losing however many millions on the games too.