Portable Positioning

There's little question about which platform holder has the most riding on its E3 performance. Certainly, it will be fascinating to see how Nintendo plans to maintain its success for another year, while Microsoft's rumoured motion controller and future software line-up is of great interest - but it's Sony whose conference will be watched most closely.

The reasons for that are twofold. Firstly, Sony - having led the market for over a decade - is now struggling. The PS3 is in third place behind Nintendo and Microsoft and while it's selling remarkably well considering its high price point, it simply isn't building installed base at the rate it needs to challenge its competitors. The PSP, although a success by many measures, has sold less than half the units of its rival, the DS - a rival it was widely predicted to crush when both devices were announced.

Secondly, and perhaps as a consequence of the first, Sony's intentions at E3 have been widely speculated about. The PSP is seen as a likely candidate for a major hardware overhaul, while the PS3's much discussed price drop has now been overtaken by rumours of a hardware redesign which would significantly slim down the big black box. Unusually for a mid-cycle E3, the indications are that Sony's conference will be as much about hardware as it is about software.

For my part, I'm extremely dubious that we'll see any immediate change to the PS3 strategy in the coming months. Were I a gambler, I'd place my bet on a price drop to the hardware this autumn, rather than at E3. If a slim PS3 is to be introduced, I'd also expect to see that in autumn - potentially being introduced at a relatively high price point, allowing the existing hardware to remain on the market at a reduced price level. By reshuffling the hardware line-up in autumn, Sony would be able to keep the new system and price points looking fresh as we head into the vital pre-Christmas market.

The PSP, however, looks like a shoo-in for a refresh at E3. Changes to the PS3 at the conference would surprise me - it simply seems too early. However, if the company doesn't announce a change of direction for its handheld console, that'll be an even bigger surprise.

Despite managing to sell around 50 million units to date, the PSP is a console which presently finds itself beset by problems from all sides. While some of those problems relate to the astonishing success of the Nintendo DS, others are of the platform's own making. The system's design, praised for its fantastic screen, suffers from a variety of crippling problems.

It's too big, for a start. Sony would like people to see the PSP as the portable media device of choice, but the form factor - while relatively comfortable for gaming - just doesn't lend itself to being popped into a pocket and carried around as a replacement for an iPod.

Part of the reason for that form factor, and one of the PSP's other huge problems, is the UMD drive. UMD has been, as its critics predicted from the outset, a disaster. UMD movies were overpriced, low quality and unappealing. The drive is noisy and sucks away battery power when in us. The discs are bulky (for a portable device), fragile and slow, contributing to terrible load delays on many PSP titles.

The PSP has piracy problems, the scale of which it's tricky to estimate. Some of those problems simply arise because the pirates can crack the system and get games for free - but Sony hasn't helped matters by designing its hardware and software such that pirates actually get a better, more enjoyable user experience than paying customers do.

This is a perfect example of some of the foolishness which has done so much to promote piracy in this industry and others. For years, customers who would happily pay for music ended up downloading illegal MP3s because, for customers who were using digital music players, the experience of downloading from a pirate site was better and more convenient than the experience of buying from a legitimate retailer. On the PSP, if you want good battery life, fast loading and the ability to carry around several games without a big case of discs, you have to crack your console and pirate the software.

This isn't the sole reason for piracy on the system, nor is it a defence of piracy. There will always be those who wish to simply get things for free. However, that's no excuse for allowing a situation where pirates get a better experience than your paying customers do. The piracy issue highlights a set of problems which Sony needs to solve if the PSP is to prosper as a platform - both from a consumer and a publisher perspective.

That's why the noises being made about the next PSP are so encouraging. Removing the UMD drive will kill backwards compatibility, which is problematic (especially since a system for transferring your existing UMDs legally onto the new system seems highly unlikely) but far less so than retaining the drive hardware would be. The addition of high-capacity memory stick slots and, presumably, a chunk of internal flash memory is a much better solution - one which, however, will need to be backed up with an excellent range of software on PSN on day one. If Sony can't get reasonable pricing (and that means matching the discounted retail prices of old PSP titles and resisting the urge to charge an unjustified "digital premium") and a big range of software out there, the new device will run into problems very early on.

Changing the form factor to make the PSP more pocket-friendly will increase its appeal as a media platform. Talk of a sliding screen which conceals the game controls makes sense, especially if it's coupled with media controls on the unit body itself. From a media perspective, too, Sony needs to think long and hard about the store and software side of its offering. PlayStation Network has been a success in a way which predecessors like the Connect Music Store never managed - now the lessons of PSN must be applied logically to music and movie downloads. A close eye on Apple's success with the iTunes Store wouldn't go amiss, either.

Other changes, too, would make sense - but it remains to be seen just how radical Sony is prepared to be with the new PSP. The original model acquired a variety of peripherals including a camera, a microphone and a GPS receiver. It's hard to imagine any sensible excuse for not integrating those peripherals into the hardware of the new model, given how cheap such technology is, and how much potential they would unlock for games, media and networking functions alike.

One thing seems almost certain - the new PSP, assuming it emerges, will be the talk of E3. As Sony's first hardware launch since the controversial, delayed and generally disappointing appearance of the PS3, the company's reputation is on the line here - and it's not just SCE that needs to be sweating. Sony's entire ability to command market share in portable media is in question. The firm which invented the Walkman needs to answer that question comprehensively if it's to stay relevant in this sector.