UK tech site
reghardware.co.uk is reporting SEGA is working on a new handheld to rival the PSP.
Named the "SEGA Vision"; it's being labeled as a media device, capable of:
* Live TV (built in TV tuner)
* Video playback device (MP4; probably xvid, WMV, divx also; maybe AVC, VC-1, x264)
* Music player (MP3, WMA, WAV, FLAC, APE)
* 2GB memory built in - 6GB w/ SD card (has SD card slot)
* Digital Camera (still & video)
* Voice Recorder
* E-Book reader (supports E-Books & txt files)
* Games (plays java based games)
* Pocket Sized (probably somewhere between a DS & PSP in size)
HQ Version
Apparently there are prototypes of it available in a crane-prize machine in the London arcade's grabber machine right next to an iPod nano machine. (any1 in London who makes arcade trips care to take some pics & post them up?)
SEGA has told The Register it plans to launch the Vision next year, but pricing hasn't been set.