In a report from Nikkei business daily, it is said that Sony will be putting together a team tasked with creating a new gaming phone that will go head-to-head with the iPhone.

The PSP phone, if built as rumored, will combine the PSP’s functions with those of Sony Ericsson phones and that development team could be together by as early as July.

Sony, of course, has declined to comment, and according to Edge, the ‘PSphone’ has been rumored on several occasions.

However, Edge did point out that last month that Sony Ericsson president Hideki Komiyama said that he would be interested in tapping Sony’s strength in the gaming market, and has gone on the record saying a PlayStation phone, “could happen,” adding that, “If we do not adapt to this new technology or new market environment, we’re going to lose.”

Story at Edge.