It's the rumor that won't go away, and for good reason. Pocket Gamer explores the legend of the PlayStation Phone, and why it's so believable. The primary reason is history: Synergy with other Sony properties is a common practice for the phone maker. For example, the Walkman music phone, the Cybershot camera phone, and the Bravia TV phone. Certainly, a PlayStation phone would fit perfectly in this family.
Pocket Gamer suggests that the PS Phone should resemble the sliding Sony w850i (pictured). When open, the phone will have the necessary keys for making phone calls. However, when closed, the device would resemble a PSP, and feature Sony's distinctive button layout.
The phone would also need impressive 3D capabilities. Nvidia, the graphics provider of PS3, has proven it can provide top-of-the-line graphics on phones, and we'd expect no less on the PS Phone. Connectivity with PSP and PS3 would be vital, and as such Bluetooth and wi-fi support would be necessary. Add music and video capabilities, and a camera, and this dream phone will have it all--and the pricetag to boot. (It would be in the astronomical range of Apple's iPhone.)
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