Regardless of whether or not it can approach giants like the iPhone or the Blackberry in overall functionality, it seems like the last word on gaming phones is coming, possibly as soon as this year. According to an engadget report, Sony Ericsson and Google are teaming up to create an Android based mobile phone/gaming platform that could be out in time for the Holidays, and threatens to blow away the gaming capabilities of every phone currently out on the market.

The unnamed device will be one of the first to run the as yet unreleased Google Android 3 (aka Gingerbread) operating system. It will be a slider, with PSP-like game controls (with a “long touch pad” instead of a joystick) in place of a standard keyboard. The display is rumored to be between 3.7 to 4.1 inches. The mystery phone will come with a 1GHz processor and a built-in camera, as well. With some of the first games rumored to be versions of existing PSP and PSX games, it sounds like a Playstation phone is on the way, along with a specialized section of the Android store dedicated to gaming.

If all the rumors are true, this phone might just prove to be a gold mine for the Android OS. Google, which at this point is known well by third-party developers for being much easier to work with and much less restrictive than Apple, could see a huge jump in profit off of app-based gaming. This can only mean good things for gamers everywhere down the road. Apple, on the other hand, has shown no signs of being willing to back off from its policy of requiring every app developed for its OS to go through a rigid, though poorly defined, approval process, an unpopular practice that could finally catch up to Steve Jobs’ burgeoning empire. If Sony and Google gain a decided tech advantage, the ball will be squarely in Apple’s court to figure out a way to keep up their market share among gamers and their business with third party app developers, especially if this new phone can offer 3D gaming, which it is rumored to do.

Personally, I can’t wait to get my hands on this device. A true gaming phone would be a dream come true for me and I’m sure a lot of gamers out there, as the mobile market continues to explode with newer and more innovative products. If this first iteration is a hit, which it by all means should be, I await with bated breath for what the next couple years will bring, now that a gauntlet of incredible proportions for mobile gaming has just been thrown down.