John Koller is the Director of Hardware Marketing for Sony, and he has brought three PSP Go units to our meeting: two black, and one white. Both colors will be available the first day of release, October 1. It's hard to concentrate on the interview when the hardware is sitting on the table, but I hold off on picking one up until I get a few answers. The good news is that Koller understands the concerns people have about the system, and the PSP Go may be much more consumer—and retail—friendly than many have assumed.

Of course, first you have to get past that price: $250, coming on October 1. "We have a two-model strategy now, we're still in the UMD business long-term, we're still in the 3000 business long-term, that's the lower-end SKU." Koller says. The PSP Go is marketed to the "digitally savvy" male tech adopter. Koller compares the price to the 16GB iPod Touch, or the Zune. "No one has really done this, in terms of large, full games digitally. We've seen the trend lines increase significantly and that's why we're doing this. People are looking for ways to leave their discs behind."

With direct access to the video store and 16GB of internal memory, the PSP Go is seemingly being positioned as a digital, online entertainment device, not simply a games machine.

The problem is that many Sony fans already have stacks of UMDs, and the PSP Go has no way to play the games; the system is purely digital. So what does one do with all their physical media? "It doesn't make sense to leave [PSP owners] behind. We're going to have a program put into place that will allow that person to become part of the digital lifestyle. We'll have details closer to launch." In other words, Sony doesn't want your UMD collection to keep you from upgrading to the PSP Go, but it's not ready to announce its plans. It's possible you'll be able to mail in your games for download vouchers, or send in UPC codes, or Sony will come up with some other way for you to play your games on the Go while keeping you honest. Koller promises that before launch gamers will know exactly what to do with their older titles.

Retail is on board, and there will be plenty of content for the system

The problem is, with no physical games to sell for the PSP Go, why would retailers want to stock the system? "We still need retail, we need them for the 3000, we need them for the UMDs, we need them for this model," Koller says. He claims that some retailers gave Sony a standing ovation when they heard the details of the PSP Go's business model: retailers will be selling PlayStation Network cards, and they'll be selling the hardware. Also, here's an interesting tidbit that Koller revealed: "We've changed the model from a margin perspective from the 3000, so there are changes throughout," he explained. "We've made it very worth their while to carry the PSP Go."

In most cases with hardware, retail stores make a tiny profit, if not a tiny loss, on sales. The profit comes from selling games, warranties, and accessories. If Sony adjusted pricing so retailers make a profit on selling just the hardware, stores could warm up to the PSP Go very quickly. Sell a point card—cheap to ship and won't take up much wall space—for game downloads with the system, and the business model looks even more attractive. And of course customers will want a new case and memory stick for their hardware... you begin to see that the PSP Go may be very retail-friendly.

As for games, you'll be taken care of. "We're going to have about 300-350 of the legacy and catalog games that we're going to be bringing to digital, we're going to do that prior to or at launch... there's going to be a lot of content." There will also be 30 to 50 classic PSone games coming to the store in the near future. With all future PSP releases hitting both UMDs and digital downloads, and so many catalog titles being released, it doesn't seem like content will be an issue.

Piracy, and the ability to share your games

The one thing you lose with a purely digital product is the ability to share your games; the title is typically locked down to the system it was downloaded onto, but if you have multiple systems, that can be a pain in the butt. "We need to work out the usage rights, that's a development that we'll have to talk to as we get closer to launch. We have a plan in place, we just haven't made that public." He seems to understand the importance of being able to share content in the home with multiple consoles. "It's a good point, if you have a UMD you can pass it around. We need to come out publicly with the plan on that as we get closer. We'll have a lot of announcements as we get closer to launch."

The PSP is a system that has been plagued with piracy issues, but Sony is starting to get a grasp on the problem. "We've had a lot of success with the 3000," Koller says when I bring up the issue. While the earlier models of the PSP were incredibly easy to use with ripped or downloaded games, the PSP Go is going to make things tougher on the pirates. "You won't be able to rip your games and play them on the system, the firmware precludes that," Koller explained. "There's no external battery, so there's a number of protections put into place on the system."

So how is the hardware?

When an executive hands you a piece of hardware, it's usually a good idea to see what's on the memory stick. I found a demo of LittleBigPlanet on Koller's PSP Go, and happily began playing. The PSP Go is a striking piece of hardware: both thin and light, but it feels neither cheap nor fragile. The screen is noticeably smaller than the original PSP, but the picture is razor sharp and bright. I'm impressed by the sound coming out of the speakers as well—it's very loud and clear.

The hardware features a built-in microphone so Skype will continue to work, and the built-in Bluetooth capabilities also means that you'll be able to use a Bluetooth headset for making calls or chatting online; that's quite the nice touch for people who use a headset for their PS3 online play.

The buttons likewise feel good, and the analog nub seems smaller than what we're used to from the older hardware. Is it too close to the face buttons? I played the game for about five minutes, and I got used to the placement very quickly. Without having the time to put in a marathon session however, it's hard to know if it will cause hand cramps.

The hardware looks and feels impressive in person. This is a serious device.

We'll be learning much more about the PSP Go in the coming months before launch, but the interview showed that Sony knows what you're worried about, and it's working on making the digital aspects of the device as painless as possible for existing customers. Or they're blowing smoke. We'll have to wait until we know exactly what we'll be doing with our old UMD-based games, and see how locked down the content is once downloaded.

The PSP Go is something of a gamble for Sony, now matter how confident a mien the company adopts. The price is high. Digital is still largely unproven as a primary delivery device for full-sized games on portables, not to mention consoles. It's certainly a bold move, and the hardware looks and feels attractive and high-quality in person. It also launches alongside a new Gran Turismo title, a not insignificant way to get people's attention. Koller tells Ars that having Gran Turismo ready for launch is important, and gamers can also expect some content to ship on the portable, most likely game demos or video.

One thing is for sure: the PSP is an exciting platform again. The PSP Go releases on October 1, for $250.