The Hardware is More Phone than Console
We'd have to see the final hardware before passing judgment, but even the thinnest QWERTY sliders have substantial chunkiness to them when compared to slates. You'd have to be really serious about games to make the tradeoff. One thing we've learned from hardware keyboard is that the thinner they are, the less satisfying the keys are to use. A thin phone, like the Droid, tends to have very low-travel keys, and manufacturers have to make them clickier for you to even notice the press. This has the side-effect of making them stiff. We have a concern that if Sony Ericsson is overly concerned about thickness, the gamepad buttons could go wrong in an entirely different way.
The specs seem respectable with a 1GHz Qualcomm MSM8655 (the same chip that's in the Desire HD), and 512MB of RAM. We're worried about the storage situation though. The rumor indicates only 1GB of ROM. That wouldn't be good enough for PSP-level games. That leaves us with the expansion card, which would offer basically unlimited space with swappable cards, but they could be slow. Internal memory is usually much faster, and that could matter for games.
The Strategy Should be Aggressive
This might be the first big hurdle for Sony because, well - they're Sony. We have a lot of fondness for Sony, but their mobile strategy has been terrible. So many promising devices have been delayed, and eventually confined to the Sony Style Store. As cool as a PlayStation phone might be, we can't see anyone paying $799 for an unlocked device straight from Sony.
The gaming environment on these future Android gaming devices will likely be a software layer on top of Android. It might be completely independent of the underlying Android OS. Some of the leaked shots show a Z-System label in the corner. The speculation is that this could be the Sony gaming ecosystem on Android with its own interface and game store. This might be the best way to go about it. It becomes a console at that point, and a shopping experience can be crafted that keeps that in mind, not just a new section in the regular Android Market.
This Z-System could also serve as a kind of psychological wedge. It separates the functions of the phone. If you're playing games, you are in Z-System, otherwise it's an Android phone. It becomes a different device with different purposes. Sony and Google are free from making attempts at integration with the Android platform. You're either in phone mode, or console mode, and the two need not meet.
This is in stark contrast to Windows Phone 7, which would be the other platform with console credentials thanks to its Xbox Live integration. WP7 is pushing the Xbox games as an extension of the platform. The games are tied into the home screen hub system with your avatar and the ability to earn achievements on the phone. The PS phone would presumably, not be able to do that. But it could make for a more focused gaming experience. A Windows Phone 7 game needs to adhere to the Windows Phone 7 platform, but a PlayStation phone that ran all its games in a sub-interface (Z-System?) could do whatever it wanted.
Android's gaming ecosystem right now is limited to casual games. As more advanced users demand high-end games, Android's various problems could make native console-level games tough. That's why a PlayStation phone could make sense. The drawback is that there will be a certain degree of balkanization in the gaming space. Like the PlayStation games, the Unreal Engine might only hit Android phones running certain hardware (Tegra 2 in this case). For Android to beat other mobile platforms, these niche devices might need to happen. In the process, the handheld consoles could find themselves bested as well.
Image credits: Engadget, Flickr user MNgilen