Consumer electronics giant Sony plans to develop a mobile phone-game player hybrid in a bid to better compete with Apple's highly popular iPhone. 
The Japanese conglomerate released its first Walkman three decades ago, dominating the portable music player market, but it has been falling far behind the iPod and iPhone in recent years.
Sony is considering setting up a project team as early as July to make a new device that combines the functions of its portable gaming device and mobile phones.
An increasing number of game developers including Capcom and Square Enix are now launching software on the iPhone to take advantage of the popularity of Apple's platform, posing a growing threat to Sony's PlayStation Portable and Nintendo's DS portable gaming consoles.
