Who hasn’t walked down the street and seen people with their heads buried in their iPhones? And you know they aren’t all looking up stock quotes or making work calls. Most are playing Paper Toss or checking in with Foursquare. We even see those jealous Verizon customers with their Droids as they secretly wait for their carrier to pick up the iPhone.

Smart phones are the way technology is pointing with their layers of functionality and ever increasing capabilities. That’s why it wasn’t a surprise Thursday morning when the Wall Street Journal reported that Sony would be entering the smart phone arena. Of special interest to this particular item though is that it will be “capable of downloading and playing PlayStation games”, possibly referring to PlayStation One titles specifically.

Reported as a device that “blurs distinctions among a netbook, an e-reader and a PlayStation Portable,” they are already expecting a 2010 launch. It is possible that Sony may make a big announcement regarding this phone next week during the Games Developers Conference.

With ever declining PSP sales and the lackluster response to the PSP Go, one would think the portable device market was in trouble. Nintendo has shown with the DS and the record breaking game sales of Plants vs. Zombies on the iPhone have shown that this isn’t the case however and that Sony is just searching for its niche still.

Late last week, the NPD Group who is in charge of tracking, compiling and interpreting sales numbers for the video game industry released their console and game sales figures for the month of October with some surprising results. These numbers do not include Walmart sales or digital distribution of games. Let’s take a look.

Console Sales

1. Nintendo Wii: 506,900 (up from 462,800)

2. Nintendo DS: 457,600 (down from 524,200, includes all Nintendo DS SKU’s and Nintendo DSi)

3. Playstation 3: 320,600 (down from 491,800)

4. XBox 360: 249,700 (down from 352,600)

5. PSP: 174,600 (up from 146,000, includes all PSP SKU’s and PSP Go)

6. Playstation 2: 117,800 (down from 146,000)

So what does this mean for the video game industry? A few things. Nintendo takes back their top non-portable spot after losing it last month to the price reduced Playstation 3. Back over the half million a month mark, the Nintendo Wii price reduction to $199 had been a long time coming and has shown it was enough of a stimulus to even beat out the Nintendo DS as the top selling console of the month. While Sony made a huge campaign out of their price drop back in September, Nintendo has been more subtle about theirs, only posting in circulars instead of the TV adds Sony has used to attempt to make up ground.

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Following Nintendo’s Wii Sports Resort and Mario filled press events, Sony Computer Entertainment of America’s CEO and President Jack Trentton took the stage. Jack said that despite numerous press leaks, Sony still had some tricks up their sleeve. He was proud to announce Sony would be releasing 364 games this year before pointing out that Sony was the only company currently running three separate systems at the same time (which isn’t entirely true as Nintendo has the Wii, DS and DSi, which has some different games not available to the DS). After giving some projected sales figures for the Playstation 3, he applauded the success of Infamous, calling it the first successful summer blockbuster game with ratings averaging over 90%.

The first new title shown, Uncharted 2: Among Thieves, was presented by Evan Wells, CEO of developer Naughty Dog. The single player gameplay footage showed Drake and a female companion climbing across rooftops when they were attacked by a helicopter. Running toward the copter and then through a building dispatching enemies on the way, the game looked beautiful.

The backgrounds expanded in the distance as the town Drake is adventuring in is burning in certain spots. In addition to the ability to kick over furniture to create cover, the demo ended with a great scene of the building you are in toppling over with furniture crashing all around you before a harrowing escape.  Jack Trentton made sure to add that Uncharted 2 is a PS3 exclusive as it was something that “could only be done on the Playstation 3.” This turned out to be the “phrase of the day” for the Sony representative.

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