Reuters: Sony making game-phone, starting work as early as July

This rumor just won’t die: Reuters is reporting through Nikkei that Sony is considering developing a cellphone-game hybrid in order to compete with Apple’s highly successful iPod Touch and iPhone.

In fact, the agency notes that Sony plans to set up a project team as early as next month to work on the device. This team would include members from Sony and Sony Ericsson, the company’s mobile phone sister company.

As expected, Sony has denied commenting on the report. One can only expect an awesome PSP phone to come out of the lab. Hope it’s as awesome in person as it is on paper.