Pachter: PSP2 will be "dead on arrival"

Wedbush Morgan Securities analyst Michael Pachter has said he thinks the handheld market is “in trouble,” and thinks PSP2 “is going to be dead on arrival.”

Speaking on the latest episode of his Pach Attack show, the analyst said he feels that the handheld market is reaching saturation point.

"We’re way approaching saturation on the handheld market," he said.

"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."

Patcher did have some positive words to say about Nintendo's forthcoming 3DS. However, he feels after an initial spike, sales will dip handing the initiative back to Apple.

"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."

Nintendo is to release 3DS in Europe and the US in March next year, while PSP2 is expected to arrive near the end of next year.