PSP2 will be "dead on arrival," says Pachter

Wedbush Morgan’s Michael Pachter has stated his belief that the handheld gaming market is inexorably approaching saturation point, and reckons Sony’s forthcoming PSP successor will be “dead on arrival.”

The gloomy forecast comes during the analyst’s latest episode of Pach Attack, where Pachter observes that folk are spending more time on swanky gadgets such as the iPod Touch in comparison to traditional portable gaming platforms.

“We’re way approaching saturation on the handheld market,” he commented.

“We’re starting to see DS hardware sales crack, I think the big woody 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 3DS, the analyst reckons that while the new platform will likely give the handheld market a shot in the arm for the time being, he feels the balance will ultimately shift back in favour of Apple’s device.

“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.”