Sony's official stance towards the leaked Playstation Phone is refusing to "comment on rumors and speculations," but a CNN interview with Sony's senior vice president of marketing at Sony Computer Entertainment of America Peter Dille seems to have done achieved nothing but confirming those rumors.
In the interview, Dille explained that the main reason behind PSP's failure is the lack of an always on connection. "The PSP is a Wi-Fi device," he said. "People are used to having always-connected devices."
Dille also explained that Sony's vision of the Playstatio Network is to be an entertainment centerpiece and be always accessible. "I don't think we fully realize that vision with a Wi-Fi device," Dille noted. "If it's not connected then it does sort of limit people."
Needless to say, the only "always on" network connection available for handheld devices is the cellular network.