It's a point of contention between observers of the vg industry and one that is really determined by how we define 'success'. Does success depend on harware sales, software/UMD sales, penetration into the Nintendo dominated handheld market or cold hard profit? Well I'm sure everybody has their own idea about which factors should be taken into account but for the purposes of this thread I'll include all of the ones I've mentioned & give my opinion on how Sony sees it's contoversial portable.

1. Hardware Sales.

This is the main stat used to fight the PSP's corner but do hardware sales alone a successful system make? If Sony had gone Nintendo's typical route and sold the PSP at a profit from day 1 it could be argued that even with no software sold the project would have yielded profit of some sort and thus been a sucess of sorts. I'm pretty sure though that this wasn't the case and that at first Sony were taking a significant hit for every unit sold. If anybody has some solid info on the profit/loss of the hardware over it's life thus far please post it but til then I'm going to assume that overall the system itself has broken even.

 2.Software/UMD

It's well known that the UMD movie failed to set the world on fire and has effectively been dropped as a serious mainstream format so we'll remove this from the argument as the minor income generated would have probably been offset by the cost of it's development.

The software is very interesting and imo the PSP's real stumbling block. If we look at the reasonably strong hardware sales we would expect corresponding healthy game sales but clicking on the worldwide software tab we can see that this is blatantly not the case. According to vgchartz the accumulated 1 million+ sellers have yet to reach 17 million, actually falling short of the system's install base which is quite amazing. I realise that the sub-million seller's would bolster this number but since I'm going to compare it to other system's software which are compiled in the same manner there shouldn't be a significant inaccuracy in my findings.

Compared to PSP's only real competitor in the hanheld market, the DS, these numbers are revealed as shockingly low. N's handheld has sold through 96.4 million copies of million+ selling software, a whopping 5.77 times what PSP has managed. Now obviously the DS has around twice the installed base but even when we take this into account the attach rate is still  just shy of 3 times that of Sony's portable.

Maybe it is unfair to compare the PSP to the dual-screened phenomenon so lets look at the GC and Xbox which in terms of hardware PSP has already passed the former and will exceed the latter in the near future. The GC racked up 81.3 million sales and the Xbox 68.3 both significantly ahead. Obviously these consoles had their entire lifetimed to accumulate these totals but even so I can't see the PSP catching even the lower of the 2 totals despite tha fact it'll have a much larger install base than either. I could of course be wrong but nothing in the software trends says to me that PSP will pick up in this regard. Development is shifting to DS and now also the continually maturing next gen home consoles. Comparing the attach rate of PSP to almost any console listed on vgchartz reinforces the view that PSP software is struggling.

An obvious contibutor to the slow game sales is piracy and homebrew but that is for a different topic and Sony doesn't profit from either.  

3. Penetration into handheld market.

I'll try to keep this short. I think Sony's brand will be a recognised and somewhat respected one in the handheld market due to the PSP but not in a way that will benefit legal software, UMD movies or any other product I can think of which Sony can make any real profit. Is it really beneficial to be a hit amongst a user base who largely uses your product for homebrew, a venture that Sony doesn't make a cent from? If Sony does releaese a PSP2 it will be interesting to see how the gaming community welcomes it especially since you can gaurantee that Sony will make it all but impossible to use it for homebrew, a feature that has been at the core of PSP's respectable sales.

 4. Profit

Well, does it exist? I'd lean towars the view that Sony has made some money on the system, after all a cut of the profits garnered from over 16.7 million software sales is not insignificant plus whatever cash they've made from peripherals etc. Considering the amount of time and resources Sony poured into the product however I'd say the company itself must be bitterly disappointed with the situation, especially considering the lofty ambitions it had for the portable and I'd say that a succesor is far from gauranteed.

In conclusion I'd say technically the PSP has neither succeeded nor failed but taking into account the huge clout the PS brand had when it entered the market and the slew of analysts backing it to dominate I'd have to say I see the system as a massive underachiever and in any real terms an overall failure.

 What do you guys think? 

I wouldn't quite count out the UMD just yet. The new PSP redesign with video out is only going to help sales of the movies, especially since they are encoded in 480p. Now if they just offer the videos at a more reasonable price, the format could still have some life. And it sounds like Sony execs understand this. Check out this Kotaku interview of Jack Tretton: http://kotaku.com/gaming/kotakutalku/jack-tretton-on-future-of-umd-278504.php.

Along those lines, there's a movie/music download service that's on the way that could be successful.  

Also, we're still really early into the life of the system. It's only been 2 years and 4 months since it came out. If it has a 5 year lifecycle like most game systems, it's not even half way done. Again, I think the redesign will help bolster sales at least for this holiday season, which will probably be its best season to date.  

Ask when it stops production, there will be a clear picture by then.

Well,any system,when compared to DS sales,could be viewed as a failure...personally,and unlike many,I never thought the PSP would come and destroy Nintendo´s dominance in the handheld market...and because of that,I view the PSP as a successful system on its own,what other handheld managed to stay in the game this long and still post very respectable sales numbers for a non Nintendo handheld?

The only success I see is that it managed to take away a chunk of the handheld market (A.K.A. Nintendo Handhelds). However, that is mostly due to the Playstation brand.

If the video output was for all models then I'd think it would have a bigger impact but as far as I'm aware it's just the Lite. Also whilst a nice feature I don't think it'll be a system seller and would again possibly have little effect on game sales. The thing I don't get about Sony making a more efficient model is that the've put in a less powerful battery meaning that even though it eats less power the new PSP will have just as short a play length per charge as before! Incredible decision! Maybe Sony will make some dough on media downloads but if that scene is anything like the gaming one on the system then most PSP owners will be getting their fix illegally.

Success, it's so far the only non-Nintendo hendheld that has ever held such a large % of the handheld market. Excluding "Gameboy Micro" it basically has 1/3 of the market.

Definitely a success. It's only been out for what, less than 2 and a half years, and it already has sold 20 million handhelds.

But no other handheld had th financial backing of a company like Sony or a brand like PS which resonated so strongly with both consumers and developers. I don't think PSP outperforming the WonderSwan or the Atari Lynx should come as a surprise.

A third of the hardware market maybe but what fraction of the software? And which one brings in the serious cash? I always find it odd that systems are judged by systems sold rather than games. The Xbox is seen as a bigger success than GC but which made more money and sold more games? Who decided systems sold was the benchmark and what reasoning lies behind it?