Scrap it, introduce a PSP2 in 2010. Eliminate the Memory Stick slot and instead use some sort of proprietary flash memory for storage. For data transfer from a PC/PS3, use some sort of proprietary client software over wifi or bluetooth. Introduce a UMD2 that's faster-loading and less power-intensive than the first UMD. Add full backwards compatibility. Add a second analog nub on the right side. Make a relatively small but substantial leap in graphical capability. Finally, price it at $149 for the basic bundle.

As the PSP becomes more popular, which I am hoping it does, I'm hoping that the audience it expands into wont be interested in hacking and so on, and more so in just the games.

Sony needs a big name title right now I would think. Maybe get Gran Turismo on there and some other big sellers. Maybe try appealing to both casual and the more hardcore audience?

As for me, right now it's the price tag that's preventing my purchase I would say. Right now the main titles I'm interest in are Monster Hunter series, God Of War: COO, Killzone Liberation, Metal Gear Solid, FFVII:CC and FF: Dissida. I think more titles like that, and a price drop could help also.

EDIT: And if PSP2 is announced anytime soon I would think it would need these:
Backwards Compatibility with PSP titles

Competitive Price

Original Features (DS has touch screen, needs something original, or at the very least, something similar)

Big Name titles

Community features (Online chat and so on)

I take it a bit farther and say that the PSP is actually what put Sony in the position it is in today. It started with launch blunders, (March in the US is not the right time of year to launch any platform), high pricepoint for a handheld ( I was working in an electronics dept of a major retailer at the time, and parents scoffed at the price, for something their kids cound and most likely would lose). Right from the start half of their market was unreachable, then the game selection did little to set it right (lots of remakes, ports of PS2 titles and generally weak games in general). Then later came the hackers who would destroy the already weak software sales. On top of all the problems the system was dealing with the DS was marketing itself as a machine for everyone.
In closing i think the PSP has been an albatros around Sony's neck since it's release, the real solution here is to kill the system and start from scratch. If they want to compete go with a more relaible flash based media, considering memory sticks are atleast 4GB now and im sure by the time a succesor came out they could be at 8GB, much more than a UMD could hold and more reliable. The widescreen design is great and without the disk based parts you would get much more battery life and still maintain the beautiful high resolution screen. The second analog stick is almost a no brainer, and a good connectivity to PSN is also a good key to success. maybe even an onboard HD for gamesaves, downloads, internet browsing and media functions. That way it can also compete with the Ipod crowd it was also trying to capture with the original.
Just a few thoughts on why the original could have much better and a smart succesor could help Sony through a difficult time if PS3 doesn't pan out as a huge success.

a psp phone! put in a built in 5megapixel cam, 3g, wifi, a second vga cam upfront plus they should make it that you had to talk on the psp phone like this

Piracy is easy to blame.

It really is the lack of unique points to make it stand out.

Points being the games.

well i've got a psp and i must say if they will manage to bring better controls and not those horrible one(i can't understand how anyone can play socom or mgs on psp with those horrible controls. i played demo verison of portable ops and fireteam bravo 2 and it was just bad) and better handheld games(not just console based games) then i think it will be good. sony have to make it more accessible to 3rd party developers too, cause right now i really can't imagine having only psp as a gaming device and not getting bored(maybe buy some good exclusive games from developers).

they should bring down the price of games.

Take a look at the sale numbers of recently released third party "core" DS games.  Yes, gamers also pirate DS games just like PSP games.

The difference is that DS has more variety of softwares been released.  They can be learning/training tools, casual games, classic-game remakes.....  These softwares happen to target consumers that are unlikely to pirate games.  They may only buy few softwares for their DS, unlike a lot of "core" gamers who wants to play everything but cannot afford to do so.

They made the mistake of creating a home console that's portable, and not a handheld. You can only do that if graphics and controls are at the same level.

But still, getting 1/3rd of the market on a first try, that's quite an accomplishment.
Yes, they'v got piracy issues, but the DS got even bigger Piracy issues.
All they have to do (and can do) now, is provide users with a steady stream of good games. They don't have to be amazing titles like God of War, but good enough to keep users happy. Because a happy user will buy the PSP2

Th PSP2 should run all its games of HDD, have a great online store to buy games, and have better controls (2 great analogue sticks, like the one the NeoGeo handheld had), and 4 shoulder buttons.


If they can steal away 33% market share now, they might be able to get 40 or 50% next time.

Personally I love the system and play it at least 10 hours a week. PSP love here :)