Electronics giant Sony has big plans to expand its PlayStation empire, including a network-enabled PlayStation2 bundle, a motion-sensing camera for enhanced input, and its first-ever portable gaming machine.

Sony's announcement of the all-in-one portable entertainment platform called the PSP drew the largest response from the gaming industry crowd gathered at the Electronic Entertainment Expo (E3) this week. Sony is revealing few details about the unit, which isn't scheduled to ship until late 2004.

But the new entry is clearly aimed at taking a bite out of the Nintendo GameBoy Advance. Sony executives are typically bold about the PSP's possible impact.

"This is the Walkman of the 21st century," said Ken Kutaragi, president and chief executive officer of SCEI, a unit of Sony.

Think of the PSP as "a new baby in the family" that shares DNA with the PlayStation2, Kutaragi said. The unit will offer a 4.5in, wide-screen TFT with a resolution of 480x272.

Capable of rendering 3D graphics, the PSP will support Mpeg-4 for DVD-quality video at low data rates, he said. It will have a USB 2.0 port for expansion, as well as a Memory Stick slot for network applications.

Software for PSP will ship on a new platform called Universal Media Disc (UMD), a 60mm optical disc that resides in a cartridge. Sony developed the technology, which will offer up to 1.8GB of storage per disc.

Sony's Kutaragi displayed one of the discs, which are about half the size of a standard CD, but he did not offer a peek at the platform itself. His only reference to its design was: "He is very cute."

Also making its debut at E3 was the EyeToy, a USB-based camera that plugs into the PlayStation2 console. It uses motion-tracking technology to allow players to interact with specially created games without using a controller.

In an EyeToy demonstration, inventor Richard Marks navigated menus, beat up bad guys, and even washed a digital window. And it won't stop there.

Sony says the $40 product, due for release in October, is set to start as a gaming tool but will evolve into much more. For example, the EyeToy could offer first-person navigation, much like that shown in the movie Minority Report. It could also support video-conferencing and communications with a virtual pet.

From June, Sony will begin equipping all PlayStation2 units with its network adapter, which offers both modem and broadband connectivity. The price will remain the same as for current units.

Sony is also throwing a few other functions into its new Online Pack. Among the additions are a built-in infrared receiver, the capability to play back recordable DVD media, and progressive-scan DVD playback.

It expects its new network bundle will foster the adoption of online gaming. It could also help maintain the company's sizable lead over Microsoft's Xbox and Nintendo's GameCube.