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Pachter believes PSP will be "dead on arrival"

Handheld market "in trouble" says analyst as Apple set to dominate

Wedbush Morgan analyst Michael Pachter has said that he thinks the PSP2 will be "dead on arrival", and that the only handhelds with a bright future are Apple's iOS devices.

Speaking during his Pach Attack! show on, Pachter answered a question about the future of the handheld market with a grim prognosis for Sony's PSP2.

"We're way approaching saturation on the handheld market," Pachter told viewers.

"We're starting to see DS hardware sales crack, I think the ubiquity of the iPod Touch is cutting into the handheld market. I think the PSP is dead on arrival and I think the PSP2 is going to be dead on arrival.

"It looks to me like young kids are just as happy playing with an iPod Touch or a Nano. The Touch is cool, it plays games, plays music, they're going to put a camera in it and you're going to get all kinds of cool stuff."

Pachter also has a dim view of the 3DS's future, although he gives it a little more credence than its Sony rival.

"The 3DS will prolong the handheld market for the game manufacturers, but ultimately, I think handhelds are in trouble. I really think as the iPod Touch gets more and more powerful, you're going to see a lot of free games over there.

"What's the difference if you play Tetris on an iPod Touch or on a DS? Well, you pay a buck on the iPod Touch, you pay $20 on the DS. Parents prefer $1 or free software, I think the iPod Touch is going to sell really, really well. So, after the 3DS has had its little rush I think the handhelds will continue to decline."

Pachter also foresees a further round of price cuts for the PS3 and 360, expecting their prices to drop to the $200 range in the US by next Christmas, a move which he believes will see a lot of consumers "upgrading their Wiis" as a result.

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Dan Pearson