Sony Ericsson prepping Android 3.0 PlayStation Phone to take on iOS gaming?

Engadget has it from a reliable source that there's a device being prepared by Sony Ericsson that will look like a cross between a Samsung Captivate and PSP Go, run Android 3.0 "Gingerbread" and, enjoy PS titles like God of War.
If it pans out, if they nail the hardware and software, it will be a serious competitor to iPhone and iOS in the mobile gaming space. If Sony can work a little Apple-style magic and get it integrated with the PS3, it could be flat out awesome.
So what do you think, combine this with Windows Phone 7 getting Xbox live features, will Apple, the App Store, and their upcoming Game Center be enough to hold on to the mobile gaming market?
[Engadget via Android Central]
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Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.