According to Nikkei business daily, Sony is to establish a new development team with the goal to create a new gaming phone to compete with Apple's iPhone.

The new phone is said to combine gaming features of the PSP with the functionality found in Sony Ericsson mobile phones. A team could begin work on the project as early as July.

Both the Walkman and Cybershot brands have been successfully incorporated into the Sony Ericcson mobile phone range, and last month Sony Ericsson president Hideki Komiyama revealed that a PlayStation mobile "could happen".

Via Edge Online