Whoa. We didn't see this one coming. Straight out of left field, Sony's just announced that it's releasing a cheaper, uglier PSP sans Wi-Fi for the masses later this year.
As you can see in the picture above, the new PSP model will look a lot like the current one, but with redesigned buttons located under the screen (appear to be touch-activated). The Wi-Fi lights and modules are gone and it also would appear the handheld's dual speakers have been swapped out for a single one just above the D-Pad.
Without Wi-Fi, the new cheap and plasticky PSP will not have access to any online features such as the PlayStation Network or PlayStation Store. Games will be strictly limited to UMD discs, as it can't download digital games and it'll sell for £99 (about $143 USD) in Europe. Sony didn't announce any release of the cheaper PSP for other regions.
If Sony does release the stripped down version of the PSP in the U.S., it'll have to probably sell for $99, as the current MSRP on the PSP with Wi-Fi is $129.99.
A cheaper PSP comes at a critical time when Sony is preparing a full launch for the PS Vita in Japan later this year and in 2012 in North America and Europe. It can be taken that the low-end PSP will be a stopgap for Sony to deplete existing PSP software or provide a gateway into enticing mobile gamers over to the PS Vita.
Strategically, a low-cost PSP, along with the new $250 PlayStation 3 and the soon-to-be PS Vita would provide Sony with a three-pronged attack to fight Nintendo's current DSi/3DS/Wii trifeca and soon-to-be-released Wii U.
As the Wii U is expected to cost at least $300, you can look at it any way you want, but come this time next year, the PS3 will be likely be cheaper than the Wii U and the cheapo PSP lower than the DSi and DSi XL. That's two out of three, with the 3DS's sharp price cut besting out the PS Vita's $250 starting price. PlayStation might just become the brand that gives gamers the "most value" that's long been associated with Nintendo.
Personally, I'm not digging the design, as I feel it looks cheaper, but if Japan's any indication, the PSP is still thriving in regions and an entry level price would undoubtedly convince latecomers to join the PSP bandwagon. I mean, despite what most gamers say, there are great games like the God of War series and other gems for PSP. Developer support might be shifting over to the PS Vita, but it would seem the PSP still has some life left before it's buried by Sony.