The iPhone needs to watch its back with the creation of this product.   If the PSP wasn’t cool enough adding phone capabilities would make it unbeatable

The newest version of Sony’s PlayStation Portable isn’t even on sale yet, but the company is already looking ahead to what’s next, according to Reuters.

The electronics giant is looking into making a combination gadget that would meld its PSP gaming system with the cell phones made by Sony Ericsson, its joint venture Swedish electronics maker Ericsson, according to Reuters, which cited the Nikkei business daily.

Sony reportedly plans to put together a team as early as July to begin development of the new gadget. Sony no doubt has its eye on Apple’s iPhone, which is already popular with consumers and is now getting more serious attention from game developers as a platform for their games.

This isn’t the first time rumors of this nature have circulated. In 2007, Sony raised eyebrows with a patent filing that appeared to show a PSP-like device with phone capabilities, and British Telecom said it was working with the company to bring voice and video chat to the PSP.

In the meantime, Sony continues to work on its portable gaming device. The PSP Go, which was unveiled at the E3 gaming conference, is smaller than its predecessors and has a slide-up screen. It will go on sale in North America on October 1 for $249.