Though the PSP is poised to become the breakthrough hybrid handheld of 2005—with games, movies, music, and Wi-Fi—Sony was smart to position the device primarily as a gaming platform. But its sleek, intuitive design could be dampened by the fact that it plays movies and games only on two of Sony’s proprietary storage formats, the Memory Stick and the Universal Media Disc.

BOTTOM LINE: With more than 800,000 units already shipped in Japan, Sony expects to ship an additional 3 million PSPs worldwide by the end of March.