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Even if it’s a handheld PS4, if it can’t play any latest PS5 games, then Sony would need to support it with games made specifically for it, and I don’t think they give enough output to support two systems.
Steam Deck is supported by the huge steam library, so difficult to compete with it without good first party support.
If a game is low spec enough to run on a PS4, it typically has a PS4 version as far as I can tell, but maybe there are exceptions I haven’t kept up with. And in order to have a handheld PlayStation that doesn’t require its own versions of games like the Vita and PSP did in the past, the best they can really hope for is a PS4. That’s why this problem seems insurmountable unless they go the PC route like everyone else.
I wasn’t talking about 3rd party, there are enough of them that will run on a PS4 level hardware as long as we don’t count new AAA. Problem is first party games. If there are no first party games, then on what basis can it compete with Steam Deck or upcoming Switch 2?