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Sony Ericsson "PSP" phone could threaten Apple's iOS game revenue

An unconfirmed report claims that Sony Ericsson is at work on a Playstation-branded Android smartphone with a new gaming ecosystem.

Published by Engadget, the report cites "a trusted source" for leaked details of the upcoming device. Described as a cross between "the Samsung Captivate and the PSP Go," the phone would use PSP-style controls instead of a traditional QWERTY keyboard. It could also include a 5 megapixel camera and a 1 GHz Snapdragon processor.

With a potential release as early as October of this year, the phone would pioneer both an Android dedicated gaming ecosystem and the long-rumored PSP phone combination.

The smartphone will reportedly run Android 3.0, also known as Gingerbread. A new area of the Android Market would be created specifically for games, which could be ported from the PSP or PSX library. These games could then be brought to other Android phones, provided they meet certain specification and control requirements.

For its part, Apple has recently been ramping up its focus on mobile gaming. The Cupertino, Calif., company is developing a Game Center social gaming network for iOS 4 that will provide a centralized friend system, leaderboards, and unlockable achievements. The feature was announced in April and is slated for release this fall.

In March, Flurry Analytics reported that Apple's share of the American mobile gaming market had grown from 5% to 19% from 2008 to 2009. Apple's growth cut significantly into the Sony PSP's market share, which dropped nearly half from 20% to 11%.

In April, Apple hired a new games editor, Matt Casamassina, for the iPhone App Store. According to Casamassina, he will "be leading the charge for games on the App Store."

Apple could also be looking to purchase a Chinese game developer to advance further into the mobile gaming market. In early August, rumors said a final deal with Handseeing Information Technology Co is "close," with an estimated price of $148 million.