Forget that blurry shaky cam footage of the purported PlayStation Phone in action -- That's old news.

Today, we're seeing crystal clear footage of said phone, now codenamed the Zeus Z1, in action. Better watch the video on your iPhone because the two of you could be parting ways pretty soon.

It might not be the PSP 2 that everyone is hoping for (although that’s still happening) but this phone packs a ton of features that gamers expect from an Android-based phone looking to compete with Apple's heavy-hitter. Early naysayers might think that the PlayStation icon is simply a placeholder for what will eventually end up being simply the phone's games app. Think again.

Check out the footage, courtesy of Engadget, and see the PlayStation phone in action:

The second video of the phone shows that once the PlayStation icon is selected the user is taken to a screen reminiscent of the XMB screen. Unfortunately, without any content on the prototype, that’s the end of the demonstration - but certainly the possibilities are limitless.

Could this phone be capable of playing PlayStation 1 games, PlayStation 2 games, or even, dare I say it, PlayStation 3 games? While PS3 games are certainly unlikely, it is absolutely within the realm of possibility that, given the iPhone’s advancements in gaming, that this new tech would be capable of running some old-school classics.

Until Sony actually comes out and introduces the phone to the world, any piece of information regarding its capabilities would purely be speculation. Gamers would certainly welcome a competent iPhone competitor that blends the gaming capabilities of the PSP with the versatility of an Android phone. Gaming-wise the phone does look to have the goods - but that only fulfills one half of the equation.

As soon as we knows more, we'll be sure to deliver any news regarding the phone. For now spend some quality time with your current smart phone - the clock is ticking.

Would you be interested in switching to a PlayStation Phone capable of playing some of Sony’s back library? What features would you hope to see in the phone to make it an iPhone killer?

Source: Engadget