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PS Phone: There's no smoke without fire

That's what Sony Ericsson has said.

Sony Ericsson has all but run around screaming, "Yes yes we're making a PlayStation Phone at last whoopee!"

Speaking to the Wall Street Journal, Ericsson CEO Bert Nordberg said, "There's a lot of smoke, and I tell you there must be a fire somewhere."

"Sony has an extremely strong offering in the gaming market, and that's very interesting."

"Sony is of course a very strong brand," he added, "and why shouldn't we use that? Gaming, including content, is a very interesting proposition."

The WSJ heard from an undisclosed source that a new phone would carry the Sony Ericsson Xperia brand, run Google Android and offer games through an application.

Nordberg is planning a big splash at the Mobile World Congress event in Barcelona this February 2011.

The PlayStation Phone has long been speculated. It appeared to be on the verge of confirmation last month when a series of target images were leaked and numerous reports backed them up.

Sony had held back the PlayStation brand from Ericsson because mobile phones, it thought, couldn't do the game-name justice. But with Ericsson turning a rare profit earlier this year, that decision also appears to have been overturned.