Sony is considering putting together a team that would combine its PlayStation Portable with a Sony Ericsson handset, according to a report in a Japanese business daily.

The Nikkei said the company could begin putting together a team for this project as early as next month. Sony has declined to comment, but if the report is true, any gaming cellphone device would likely not hit retail stores for at least a year.

The report comes as the mobile gaming market is booming, in part because of the success of the App Store for the iPhone and the iPod Touch. This virtual store has seen more than one billion downloads since its inception about a year ago, and many of the top-selling apps have been games from big-time publishers such as Capcom, Electronic Arts, and Sega.

Additionally, the new iPhone 3.0 software and the iPhone 3GS pack new features which make Apple's platform more appealing to game makers. The updated firmware provides in-app purchasing, which could be used by gamers to buy new levels or weapons while playing. The iPhone 3GS supports OpenGL ES 2.0 for rich 3D graphics.

Sony appears to be making some moves that would make a "PSP Phone" possible. Its latest portable gaming device ditches physical media for digital distribution. Along with games, Sony will also populate its PlayStation Store with movies, TV shows, and applications; this could potentially make it a strong counterweight to the App Store.

Nokia tried creating a device that would appeal to the mobile gamer, but its N-Gage was not well-received due to its awkward design and high launch price. The company eventually shifted its and made N-Gage a mobile gaming platform for various S60 smartphones.

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