Sony is planning to develop a new mobile phone cum game console hybrid, in which it would join its PSP gaming system with the mobile phones manufactured by Sony Ericsson, reported Reuters citing the Nikkei business daily.

Reportedly, the Japanese electronics and entertainment company is planning to set up a project team as early as July to develop the new gadget. The new gadget is expected to be developed to catch up with Apple’s iPod and iPhone.

Other game makers including Capcom, Square Enix and Sega have already begun developing new softwares for the iPhone and the iPod creating competition for Sony’s portable game market and Nintendo.

At the other end, Sony decides to continue working on its portable gaming device – PSP Go which is expected to be available from October 1, 2009 in North America, Europe/PAL territories and the Asian countries. It is expected to be priced at $249.

Last month, Sony Ericsson has unveiled Aino to enable users to control and access the media content of Playstation 3.