Sony is once again considering combining a cell phone with its Playstation PSP portable gaming console which could compete with Apple's iPod and iPhone, according to a report in Japan's Nikkei Business Daily.

Sony could begin working on the new device as early as July, according to Reuters report that cited Nikkei, and so far the PlayStation maker is declining to comment on the rumors.

The report is not the first that the company could be making a potential handset. The Economic Times reported in November of 2007 that Jim Ryan, then Sony Computer Entertainment's co-chief operating officer, said that a Playstation Phone is a future possibility.

The playstation (sic) is a proven success and so is Sony Ericsson. Convergence with the two arms working together is definitely plausible, the Economic Times quoted Ryan as saying.

Mobile phone manufacturer Sony Ericsson is a joint venture between Sony and Sweden's Ericsson.

Nikkei's report follows Sony's recent unveiling of the PSP go, an update of their portable gaming device which includes 16GB of internal Flash memory and digital downloads available through an online store.  The PSP go will make its debut on October 1.