Sony is already working with Google for the Google TV setup. Having at least one good Sony phone with Android for integration makes sense. It's also easier for Sony to open a "Playstation Phone" games market to third party and independent developers using a modified Android SDK. This would allow widespread development without the costs of becoming a normal console developer, and also allow Sony to keep their internal SDK for proper Playstation consoles locked away. Even if a Playstation specific market didn't take hold, the device could still fallback to everything else in the Android market and still provide people with a reason to buy the device. The failure of the PSP Go probably has the Playstation division thinking about radical futures that take into account mobile phones and iPod Touch like devices eating into their handheld console market.