Sony Corp showcased a new handheld gaming device, the first to feature 3G wireless connectivity, as it battles with Nintendo's best-selling DS and tries to fend off rising competition from smartphones and tablets.

Sony said the new device, which it has codenamed NGP for Next Generation Portable, will go on sale around the year-end. It didn't provide any pricing details.

The announcement came the same day Nintendo reported a 46.5 percent fall in quarterly profit as sales of its aging DS device tumbled ahead of the launch next month of a 3D capable model.

Sony's new device will feature 3G wireless connectivity, the first in a portable games device, and use a 5-inch OLED panel, the company said. That compares with 3.5 inches for a standard smartphone screen.

The device also has a back touch pad in addition to the front touch panel and a motion sensor for more intuitive use, Sony said.

With smartphones and tablets from the likes of Apple Inc eating into the market for portable gaming devices, Sony and Nintendo desperately need a blockbuster product to boost sales and profit.

The key would be pricing of the device, said Nobuo Kurahashi, an analyst at Mizuho Investors Securities. If the company prices it cheaper than Nintendo's 3DS (25,000 yen), it would be positive.

Nintendo's DS sold nearly 136 million units up to last September. Sony's PSP has sold some 61 million.

Next week, Sony is expected to post a fall in profits for October-December, hit by its struggling TV business.

(Editing by Anshuman Daga and Edwina Gibbs)

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