Sony Corp. wants to develop a “a cell phone – game gear hybrid” in an attempt to reach new markets with its video gaming business as well as better compete against Apple iPhone platform for the end-users as well as game developers.

Sony plans to set up a project team as early as July to develop a new product that combines functions of its PlayStation Portable handheld entertainment system and Sony Ericsson's mobile phones, according to Nikkei Business Daily news-paper, reports Reuters news-agency. If the report is correct, then the highly-anticipated PlayStation smartphone will finally enter the market after years of speculation.

In mid-May ’09 Hideki Komiyama, president of Sony Ericsson, said in an interview that Sony Ericsson PlayStation-branded phone “could happen” in case both parties are interested in creating a handset aimed at gamers.

Earlier this year Sony executives reportedly told colleagues at Sony Ericsson that the company would only license the PlayStation brand if and when Sony makes handsets independently, which is effectively pushing for an exit from the joint venture with Ericsson. Nonetheless, Ericsson had its own explanation on the matter: there is no PlayStation phone in the plans since there is no powerful enough hardware for it.

“In the past, we have been keen that our product proposition lives up to brand promise, and we feel at the moment the technical specs are not high enough to put such a prestigious brand on a phone,” said a spokeswoman for Sony Ericsson.

Neither Sony nor Sony Ericsson commented on the news-report.

Tags: Sony, Sony Ericsson, PSP, Playstation