Sony Vita
After strong opening sales, the PS Vita is being out-sold by the PSP that it is to replace. Reuters

Sony Corp. hopes its new PlayStation Vita handheld device will take some of the fun out of the iPhone.

Sony is launching Vita in Japan on Saturday, hoping the company's first new handheld videogame system in seven years will get the company's game business going again now that many consumers have turned to Apple's iPhone, the world's bestselling smartphone, for entertainment.

The device will become available in the U.S. and Europe on Feb. 22.

The popular game Angry Birds has a lot to do with why games have become more popular on the iPhone.

Angry Birds, developed by Rovio Mobile, was the first game released for Apple's iOS system in December 2009, and since then it has sold millions of versions. Players of the game use a slingshot to launch the round, red, wingless birds at pigs on or within different structures with the aim of destroying all on the playing field. Angry Birds is popular because of its addictive format, humorous concept and low price.

The game was recently named the most popular paid-for app in Apple's App Store in 2011.

Sony has also faced challenges due to price cuts from competitior Nintendo, meaning the company needs a hit from Vita. The device, with a 5-inch display that uses OLED (organic light-emitting diode) and touch pads and operates with a touchscreen, already has sold out in pre-orders in Japan. And a Sony executive told reporters in Tokyo Thursday there were lines to make reservations for the device at retailers.

So far so good, since Sony needs the Vita to reach more than hardcore gamers to compete with iPhone gamers.

Serious gamers may bolster Vita demand in the beginning, but what Sony needs is casual gamers to sustain sales, said Satoru Kikuchi, a Tokyo-based analyst at Deutsche Bank AG, according to BusinessWeek. Sony may need to cut the price as early as next year to keep attracting buyers. It's a difficult time for console makers to make a living.

Sony has high hopes for the Vita. The company will report a $1 billion loss this year, according to Reuters, and Fitch recently downgraded the Japanese company's financial rating to one step above junk status. The company has lost money the past three years as consumers have adapted to new gaming devices like the iPhone and lower-priced alternatives.

We've been told the PS Vita sold out on pre-bookings. How it sells next year depends on the software. If they can come up with something like Monster Hunter they will be able to sell a lot, but if they don't, prospects don't look so bright, said Mito Wakabayashi, accordign to Reuters. He was referring to a game title that pushed sales of the PSP in Japan.

In other words, for mass popularity, the Sony Vita will need an Angry Birds type of software success.

Smartphone Sony Japan Deutsche Bank