• by Steve Smith , Staff Writer @popeyesm, January 26, 2006

Meanwhile, back at Sony...

While the iPod grabbed headlines, last year's other hot media player quietly built its base with multimedia capabilities that Steve Jobs can't quite match. Sony projected that 6 million PSPs were in U.S. gamers' hands in 2005. Recent updates to the PSP added Web-browsing and podcasting capabilities, along with RSS newsreading, all on a Wi-Fi-enabled handheld that's $50 cheaper than the video iPod.

Cheaper and more versatile than Apple's hype magnet, the upgraded PSP also plays "Grand Theft Auto." A growing catalog of movies released on the PSP's Universal MiniDisc format generated some $250 million in revenue.

Sponsored PSP video downloads are already de rigueur at sites like Heavy.com, which has served more than 1.1 million since the PSP's spring 2005 launch. "A lot of advertisers have been really pleased with the results," says Heavy co-CEO David Carson.

Panasonic, Schick, Sprite, Subway, and Unilever's Axe have experimented with the new medium, wrapping their brands around Heavy's download portal and offering packages of PSP video clips with branded entertainment and ads.

By positioning the PSP as an all-in-one, fully Web-connected portable device, Sony shows it's not ready to concede in its grapple with Apple.