It’s just a rumor for now but according to Kotaku, Sony is developing a smaller PSP that works pretty much on the same internal specs as the original PSP. The screen will be a brighter LED and will make the battery last significantly longer, the UMD drive faster, 8GB of onboard memory and a built-in camera and a much-improved control buttons that will resemble a Playstation 3’s dial-pad with predictive text software. It’s not going to be a touch screen, however. Suggested retail price on a possible August debut will be around $170. It makes a lot of sense for Sony to improve the form factor of the Playstation Portable but only when you go beyond its original market, ie. portable gaming where it competes with the dual-screen DS. Generationmp3 thinks it will be a PMP-killer. Even without a touch screen and a possible OLED screen, I can imagine younger consumers enjoying videos on a smaller PSP. But Sony has to work on PSP’s image problem as a slacker’s device to appeal to an older demographics.