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Will Sony take on iPod with video PSP?

Company reportedly plans new video service

Now that the Playstation madness has subsided, Sony may be turning its attention back to the PSP. But if a report in the Financial Times is correct, the competition for its next move could be just as hairy.

The newspaper says Sony plans to launch a video service for the handheld gaming device, a move that would put it in direct competition with the iPod. The service "will allow PSP owners to download a film from the Internet to a PC and then to transfer a single, legal version of the film to a Sony device," according to the report.

A key element of the service is Sony's plan to use its "Memory Stick" removable storage, rather than creating a new PSP with a built-in hard drive. That means it won't have to introduce a new version--a move that could be disastrous in the hypercompetitive gaming market, especially considering that Sony already has its hands full with other problems.

If true, the purported service might help explain the rumors of new PSP models a couple of months ago, which seemed to emphasize storage features. In any case, it would make at least some sense for Sony to compete against the iPod in the video business, because it certainly hasn't been able to do so in music.