Sony PSP Conquering Other Markets

As a handheld console, the PSP in North America is on its last leg.  It has been losing market share to smart phones, Apple products, and the NDS.  But this doesn’t mean the PSP is out for the count.  As Sony recently said, “the PSP has life left in it yet.” Sony claims that right now their main market is the children’s arena, and their game line-up seconds that claim.  Its true of most handhelds, but especially for the PSP, that they are great entertainment devices while on the road.  A parent can pick up a PSP, games, and movies and be set for the entire road trip.  They might even appropriate the PSP for one of their own long trips because the screen is so perfect for viewing movies.  But only if they don’t already have a notebook, or netbook, or portable dvd player, or iPod, or smart phone, etc. And that’s part of the problem.  When the PSP first came out, it was the most advanced handheld device on the market.  Those days are long since gone.  According to Steve Jobs, the iPod Touch is now a more popular gaming device than both the PSP and NDS.  The market has dramatically changed. Sony has two problems with gaining traction in North America: their stance on DRM and their game line-up.  The UMDs Sony uses have never been very popular in North America, and when Sony released the PSP GO, consumers had to repurchase anything they’d already bought on the UMD format if they wanted to play it on the PSP GO as well.  Not very good publicity.  Sony has also had difficulty getting the right game line up for the PSP that can compete with the NDS, so they have fallen back on the more child friendly titles. So how is the PSP still alive and kicking?  Well, North America isn’t the only market for handhelds.  The PSP dominates in handheld sales for Japan, even above the NDS.  So yes, there is life in the PSP (but not in the GO -even in Japan the PSP GO was at the bottom of hardware sales). So what is next for the PSP?  Sony tried the GO experiment, so I doubt they’ll go down that route again.  But there have been rumors of a PSP android phone as well as a PSP2 with touchscreen controls.  Sony is keeping their next move hush hush, but whatever they release next is bound to be popular all over the globe. -Michell Prunty Senior Analyst