WASHINGTON - Japanese electronics giant Sony is developing a new lineup of handheld products to counter Apple's stable of portable devices, according to The Wall Street Journal.

The newspaper, citing "people familiar with the matter," said the products under development include a smartphone capable of downloading and playing PlayStation games being developed with Swedish cellphone partner Ericsson.

Another project is a portable device that the Journal said blurs the distinctions between a netbook computer, an electronic book reader and a PlayStation Portable, or PSP.

The multifunction device is reportedly designed to compete against Apple's upcoming iPad.

The new smartphone and the multifunction device were expected to work with Sony's online media platform due to launch this month in the United States offering movies, TV shows and music like Apple's iTunes, the Journal said.

It said the new products were targeted for launch this year.

Sony Ericsson is to release its first smartphone, the Xperia X10, a device powered by Google's Android operating system, in April.

Sony refused to confirm the report but stressed that the electronics giant is interested in networked portable products.

"Sony and Sony Ericsson have been strengthening their collaboration in the networked mobile space," it said in a statement.

"However, it is not our strategy to discuss future products or business plans before we make a formal announcement. Any media report that suggests details of the product or business is based on speculation."

Apple has sold more than 40 million iPhones. The iPhone and iPod Touch are competing with Sony's PSP in the handheld gaming market. The iPad is expected to rival the Sony Reader and Amazon Kindle in the e-reader market.