PSP2 will be a download content-only device and could even be a smart phone - judging by the words of Sony Australia boss Michael Ephraim.

Although no explicit details were given as to whether or not the PSP2 would accommodate the original PSP's UMDs, the SCEA boss made physical distribution of software sound like a step back after the PSPGo:

"[PSPGo] was the first device of its kind where you did not have packaged goods or pre-recorded media. I think PSPGo will blaze the trail for future iterations of the handheld."

Rumours have been hanging in the air on the subject since Shiny Entertainment's David Perry tweeted that PSP2 will drop the UMD drive altogether back in February last year.

Talking to Gamespot, Ephraim also implied that any new handheld to hit the market would be in direct competition with the smart phone market by saying, "The handheld space is very crowded, not just in the games category but also with smart phones and so on."

Industry analyst Michael Pachter commented similarly on the competition between handheld consoles and smart phones last week.