Sony's missed opportunity: How the PSP could have been the iPhone

A couple of years ago I was talking to the folks from Sony's PlayStation division in a hotel suite in Manhattan where they were showing us the second-generation PSP, the PSP-2000. I was telling them all the things I would like to see in the PSP. "This is a mini computer," I said, complimenting them on what a great device it was. But I thought it was being underutilized. "Why don't you open this thing?" I suggested. "Let people develop for it. Screw the UMD. It's got built-in wireless, you should be able download all kinds of games and apps to it. Slap on a detachable BlackBerry-style keyboard and you're good to go."

At the time, Sony's marketing department had seemingly grappled with and settled on selling the PSP as a gaming device first and foremost with a dash of multimedia thrown in for good measure. Even if there was an active homebrew market percolating, there was little beyond the idea that the PSP could play games, music, and movies (from a UMD disc) and surf the Web on a second-rate browser. Yes, the whole PSP "store" concept was in the works, but it seemed to be moving at a glacial pace. VoIP support in the form of a Skype client was also on the table.

One of the concept designs for the PSP2.

(Credit: Joe Thomas and Rocco Devenanzio)

As all this was happening, Sony was also launching the Mylo, a Wi-Fi-enabled device with a keyboard that stood for my life online.In so many words, I told Sony it would fail. Then, when it brought out the second, improved Mylo Communicator early last year, I told their PR folks it would fail, too. (My bluntness doesn't always win me friends). I urged them to marry the Mylo with the PSP, and open it up to developers. Then they'd have something.

Cut to today. Sony has sold a lot of PSPs. More than 40 million, actually. And in those terms, the device is a lot more successful than people give Sony credit for. But for some reason, even with those numbers, developers don't seem all that excited about developing kick-ass games for the device, and unfortunately, there aren't as many good games as there should be considering the size of the PSP's audience. (For the record, I am a fan of the PSP, and play it regularly--perhaps more than any other game console).

Clearly, Sony missed an opportunity to create its own version of the Apple App Store, which is turning into a small goldmine for Apple. In sticking to its tried-and-true model of getting the hardware out, bringing the cost down to a break-even point, then making money on the software, Sony neglected to see an even bigger market for smaller, cheaper games and apps made by enterprising developers. Guess what: those guys (and gals) are now all over on the Apple App store. And they're making money--not only for themselves but for Apple.

The Mylo Communicator looks similar, doesn't it?

(Credit: Sony)

Alas, Sony developed a truly cutting-edge piece of hardware but forgot to include a cutting-edge delivery system for content. True, flash memory was still a little too expensive when the PSP first launched. But everybody knew prices were rapidly falling, and Sony could have been more ahead of the curve. Instead, it chose to stick largely to an optical disc system (UMD) that appealed to game makers and movie studios because it had a rock-solid layer of DRM to keep things secure.

Not so much. Movies failed on the PSP because they were too expensive and pirating has become rampant (just as it has on the Nintendo DS). The PSP is extremely easy to hack, and in the BitTorrent world, thousands of free PSP games and movies are downloaded daily. Sony and the developers get nothing. As an example, LocoRoco 2 was available on the Web well before it was available to U.S. customers because it had already been released in Europe and posted as a Torrent.

Considering the fact that Sony's traditionally been much better at making hardware than back- or front-end software, the fate of the PSP (and Mylo) isn't all that surprising. Is it too late for Sony to do anything about it? That remains to be seen. Prior to the release of the PSP-3000, the PlayStation Store on the PSP was something of an also-ran--games and movies had to be downloaded on the PC or PS3, then transferred to the portable. In October of 2008, Version 5.0 of the PSP firmware finally enabled direct access to and downloads from the Store, so now you can finally download movies and games straight to your PSP's Memory Stick.

To Sony's credit, it's been gradually adding more games, though the majority of them are overpriced downloadable versions of UMD games, as well as old PSOne titles that are playable on both the PSP and PS3. I noticed two travel apps and just handful of downloadable games are made exclusively for distribution in the PSP "store," which isn't organized as well as it could be. On a positive note, there are plenty of demos available for download. However, overall the PSP's offerings just don't compare with the wider variety of original titles available on Microsoft's Xbox Live Arcade or Nintendo's WiiWare program on the Wii--or even what's up on Sony's PS3 store.

Slow as the transition away from UMD is, it's a step in the right direction for Sony. The fact is that in this economy cheap sells. Yes, people will buy still but $60 games (and $40 games for the PSP), but they're going to be much more selective in what they buy. In other words, only the best games will do well at top-of-the-line prices; second tier titles, even if they're good, will have to come down in price to move a lot of units. And when it comes to the PSP, the more sub $10 (and $5) titles that are offered, the better.

Obviously, Sony--like everyone else--has looked at the success of the Apple App Store and considered how it can bring that kind of enthusiasm and creativity to its portable gaming platform. I'm not sure what we'll see in a true next-gen PSP. The rumored PSP-4000 will probably just be an incremental improvement over the current PSP-3000, but Sony needs a serious paradigm shift when it moves to the PSP 2--or whatever it's called. Doing away with the UMD would be a start. And refashioning the PSP--or at least a premium PSP--as part game console, part Netbook, would be the next move.

I've said it before and I'll say it again: marry the PSP and the Mylo, throw in a killer app store, slap a $299 price tag on the whole thing, and you've got something. Oh, and, Sony, if you're going to continue using Memory Stick Duo, please bring prices in line to that of SD cards.

Anybody else have a better idea?