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Why the PSP is the key to Sony's future

Don Reisinger thinks Sony can capitalize on the PSP and turn things around in the video game industry. But will Sony follow his advice and try to make the PSP the central focus in its strategy going forward?

I've been tough on Sony over the past year for the mistakes I think it has committed with the Playstation 3. I'm a firm believer that Sony should bring the price of its console down and drop the price of Blu-ray players to make its format more appealing to consumers.

But just because I believe that, it doesn't mean that there isn't any hope for Sony to turn things around. And I still believe that there's no debating that the Playstation 3 is probably one of the most capable devices on the market. But if Sony really wants to reach a position of dominance in the video game industry again and make people realize that it's offering a fine alternative to other products in the market, it needs to tie its future to the PSP.

Why the PSP? It's simple: Sony's handheld is an unbridled success that has caught some people off-guard. In the handheld market, it's extremely difficult for other companies besides Nintendo to gain a foothold. But in just a few short years, the PSP has been able to persevere through its rough start and become one of the most popular devices on the market.

Realizing that, Sony needs to make the PSP a central focus in its strategy going forward. If the company won't drop the price of the Playstation 3, the best way to bring more people to its console is to use the PSP's huge installed base to its advantage.

When you compare Sony's sales numbers, it becomes abundantly clear why the PSP is its key to the future. According to sales figures derived from NPD, Sony has sold about 16.5 million Playstation 3 consoles since its release and 39.57 million PSPs since that device's release. And although that figure isn't quite as high as Nintendo's 84.6 million DS units sold, it's a major number that we shouldn't overlook.

With that many PSPs in the wild, Sony can tap into a huge market of people from across the globe that don't necessarily own a PS3 and haven't felt the need to own the console yet. By using Apple's patented convergence plan that brings together its different devices, Sony can turn PSP owners into PS3 owners in a flash.

Now, there are some titles on the PSP that employ some basic features that can be combined with your PS3. But so far, many of those options have been relatively simple and haven't had the kind of integration that would make the vast majority of PSP owners want to own a Playstation 3. Sure, a rear-view mirror might appeal to some, but in order to coax more people to buy a Playstation 3, Sony needs to make the connection between its PSP and PS3 more compelling.

Maybe it's just me, but wouldn't the ability to take any game from the PS3 to the PSP and back to the PS3 be the killer feature that would put Sony back on top? Or what about the option to switch between PSP and PS3 in-game to make the experience more interactive? As far as I can tell, the possibilities of using the PSP with the PS3 are endless.

The video game console market is a hotly contested environment that isn't nearly as easy to dominate as it once was. When Nintendo changed the way games are played, Sony and Microsoft were caught off-guard and now need to catch up. Microsoft can rely on online gaming and a lower price to bring about change and Sony has relied on a fine library of games and Blu-ray.

But as the war continues to be waged and each company in the market needs to find the single element that will appeal to gamers, Sony may have the upper hand. With the help of the PSP and its strong sales figures that will beat Sony's best estimates this year, the company is sitting on what could become its key to the future--the gateway to bigger and better things.

Think of it this way: the PSP caters to an audience that Sony may have not appealed to yet with the Playstation 3. But by making the connection between both devices much closer, kids will be asking their parents for a Playstation 3 instead of other consoles because of their desire to have the ability to enhance their overall gaming experience with both devices in-hand. And as sales rise because of the PSP, Blu-ray sales may hit a level that's far more tenable for future growth.

Sony should be commended for its ability to bring the PSP to the mainstream and become a major player in the handheld market, which Nintendo has historically dominated without fear of competition. But now that Sony has secured a foothold, the company can capitalize on its success and use it as a building block for the future.

Check out Don's Digital Home podcast, Twitter feed, and FriendFeed.