During his Pach Attack! Show, Wedbush Morgan analyst Michael Pachter expressed his belief that the PSP2 is doomed to fail as it faces an uphill battle against Apple's iOS devices which gain market share each passing day.
"We're way approaching saturation on the handheld market," he asserted. "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."
As for Nintendo's innovative 3DS, Pachter believes that "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."
During the same show Pachter also expected that Playstation 3 and Xbox 360 will continue to see price drops until they reach the $200 range in the US by next Christmas, enticing many users to "upgrading their Wiis" as a result.