Engadget is reporting that Sony (SNE) and Google (GOOG) are working on a new gaming device that will run on Android 3 (Gingerbread) and debut later this year.  It is described as:

…a cross between the Samsung Captivate and the PSP Go — in other words, it’s a landscape slider with game controls in place of the typical QWERTY keyboard. The D-pad is here, but instead of the small joystick, the device will have what was described as a “long touch pad” for analog controls, along with standard PSP buttons and shoulder buttons. The phone has a large display, described as being between 3.7 and 4.1 inches with WVGA or better resolution, a 5 megapixel camera that we’re told might not be final, and it’ll likely have a 1GHz Snapdragon CPU on board. The phone is mostly black with some silver highlights, and the gamepad area is white / silver in color. Apparently it’s currently branded as a Xperia device, but it looks like it will carry PlayStation branding as well.

They go on to say that the Android 3 market will have a special games area for downloading games.  Some of these might cross over into mainstream.  That would certainly be a new leaf overturned for Sony.

On one hand, I am cringing with the thought of another N-Gage.  But Sony knows games better than Nokia (NOK) and with the PSPGo they have experience with portable joysticks.

I may not understand gamers, but this device sounds like a typical high-end Android device that you can buy right now: 1GHz Snapdragon Processor, 4-inch display, 5-megapixel camera.  In fact, as described, it matches up pretty well with the Xperia X10 that Sony just released on AT&T.

In fact, the Snapdragon is actually pretty slow compared to Samsung’s Hummingbird and TI OMAP processors found in Motorola’s Android offerings.  That doesn’t necessarily bode well for its gaming capabilities.

More importantly, why would I buy an extra device to game on?  Why wouldn’t I just use a stock high-end Android device?   Is it the joystick?  The buttons?  Am I carrying around a second device just for that?

A third party can just build a controller that latches onto a Android phone instead of replacing it.  It has the screen, processor, gyroscopes and with Android 3.0 the OS to handle anything this Sony device will do.

OK, this isn’t for me
Clearly, I’m not the target market for this type of device.  It seems like something a kid would love, however.  Perhaps those kids you currently see on airplanes and in malls and cars placated by a Nintendo DS.  If this is the target market, they’ll need to be made cheap and sturdy.  I’m not giving my kid a $600 smartphone with a glass screen.  But with Internet connectivity and all of the other features of an Android device, a device positioned like the DS would be an interesting proposition.

Another use:
Maybe Google and Sony make them game controllers for their GoogleTV venture as well?  At Google I/O, Google made a big point of showing how useful Android devices were at controlling the GoogleTV over Wifi.  If the connection is quick enough, Sony Android devices could control games on GoogleTV.

Don’t get me wrong, I really think an Android version of Apple’s (AAPL) iPod touch is a market wide open for exploitation.  I think the success of the iPod touch and iPhone as a gaming platform also proves that you can have a successful platform in a smartphone form factor without an attached joystick.

But connecting a joystick to the device also limits its use in a world where people want a device that can do it all.

For most adults who don’t want to carry a joystick around on their phone all day, this isn’t going to fly.