New PSP in 2006, with hard drive?

Some industry analysis released by Piper Jaffray today has the video game industry abuzz with a speculated mid-2006 release of a second generation PSP, which would come with a hard drive. Again, this is speculation, but the reasoning behind it seems fairly solid. First, Sony will need something to compete with the next generation Nintendo Game Boy, which is expected to be released next year. Second, Sony wanted the PSP to compete with Apple's iPod. The current version doesn't come close. Third, Sony may need a distraction from a potential late season 2006 release for the Sony PS3, which, at this point, I feel could be pushed back to 2007. This brings up another point of analysis by Piper Jaffray, which is that the Xbox 360 will lead the market through 2008.
Interesting stuff. Read the article here.