A report in the Nikkei Business Daily on Saturday stated that Sony has plans to set up a project team as early as July to develop a projects which will add functions of it’s PSP and Sony Ericsson’s cellphones.

Publishers such as Capcom and Square Enix now have software for the iPod and Iphone which is in direct competition with the PSP.

Our inquiries to Sony have remained unanswered. The report on Nikkei states that a Sony spokesman also declined to comment.