Competition in the handset space is looking increasingly more heated towards the end of the year, with Sony hinting that its PlayStation Portable mobile phone will be ready before Christmas.

Earlier this year, an application filed by Sony Ericsson, popped up on the US Patent and Trademark Office website.

The accompanying diagrams show a device that looks very much like a PSP with a rotating display, which is designed to be used as a mobile phone, TV or gaming console depending on the configuration.

In the application, Sony makes reference to the device as “a mobile information terminal” and mentions the unit’s “gaming function” and “TV or video function”.

But this week, Sony Ericsson’s head of games, Peter Ahnegard, was quoted as saying that a PlayStation branded mobile handset would be out before year end.

In May, Sony struck a deal with BT to turn the PlayStation Portable (PSP) gaming device into a phone by integrating VoIP. But it now looks like the electronics giant has bigger plans for the popular gadget, by turning it into a cellphone.