The long-rumored PlayStation Phone is coming, says tech blog Engadget, which has photos of what it swears is a prototype of a hybrid Sony Ericsson smartphone-game console. The phone will reportedly run on Google's Android platform and have a custom Sony Marketplace for downloading games. Engadget is reporting "late 2010" as a possible launch date, but says early 2011 is more likely. Should Apple and other smartphone producers be worried? (See the rumored smartphone prototype)

Sony's a little late to the game: If the PSP phone is real, rest assured "it will mean an all-out war between Apple, Microsoft, and Sony in the category of the gaming smartphone," says Dean Takahashi in VentureBeat. But Sony has some catch-up if it wants a real fight. "Apple is stealing gamers from devices such as Sony's PlayStation Portable [PSP] family" by the "tens of millions each quarter," and Windows is set to launch its own Xbox smartphones.
"Sony's PlayStation Phone strategy takes shape..."

Watch out Apple, and everyone else: With the proliferation of iPhone and other gaming-friendly smartphones, says Suzanne Choney at MSNBC, "the notion of a PlayStation phone seems almost... quaint," or at least outdated. But the fractured competition actually gives Sony a leg up. The PSP is an established brand in the red-hot mobile gaming market, and even casual gamers need a phone.
"Sony PlayStation phone to join crowded field?"

The wild card: How important are buttons? Earlier this year, Apple reportedly topped Sony's PSP in portable-gaming market share, says Neil Hughes in Apple Insider. But the PlayStation Phone has a feature that could turn that around: "PSP controls specifically meant for gaming." Casual games work great on the iPhone, but "many traditional gamers have expressed frustration" with its lack of specialized physical buttons. How frustrated? Stay tuned.
"Leaked photos detail Sony's Android-powered 'PlayStation Phone'"