Sony is considering a gaming/phone hybrid device as a direct competitor to the iPhone, according to Nikkei Business Daily (Via Reuters). Unless you're new to the Sony Phone rumor mill, a gaming/phone hybrid has long since been rumored to be in development, but has been denied by the Japanese hardware manufacturer.

Sony currently develops mobile devices with Swedish partner Ericsson. In early 2009, MobileToday sources claimed Sony Ericsson had pitched the idea of a PlayStation-branded phone to Sony Corp, but was denied the rights to use the trademark. The rumor went on to further claim Sony only plans to license a PlayStation phone if the company plans to make handsets independently from Ericsson. In May 2009, Sony Ericsson president Hideki Komiyama stated that his company was destined to "lose" if they did not adapt to the "new technology and new market environment" -- presumably referring to Apple's iPhone.

According to the new rumor, Sony plans to set up a project team to develop the new device, which will combine functions of the PSP and Sony
Ericsson's mobile phones. A PSP phone? Just imagine how much that mythical beast would cost.

[Image Credit: Engadget]

This article was originally published on Joystiq.