The PSP2 is currently being given the codename 'Veta' with Sony Computer Entertainment, with multiple sources claiming that the machine will rival the Xbox 360 in terms of its power and processing grunt.

A number of un-named sources are also claiming that Sony will drop the UMD drive with PSP2, something that was always expected to happen, following the experiment with a disc-free console that was PSPgo.

Sony PSP Veta?

Kotaku's sources claim to have verified the multiple rumours that the PSP2 will mark the end of the UMD drive, a development on PSPgo.

One source claims users will be able to store games on memory sticks, while Sony is still considering various options for media storage.

Multiple sources have also confirmed to VG247 that PSP2 is currently codenamed "Veta".

The PSPgo uses a Memory Stick port and a 16GB internal flash drive for storage.

The PSP2's games are likely to require much more internal storage than the current range of PSP titles from Sony and its publishing partners.

The PSP2 will also be considerably more powerful than the current PSP hardware, rivalling the Xbox 360 in terms of pure processing grunt – with rumours pointing towards 1GB of RAM in the PSP2 (twice that of the Xbox 360, and considerably more than the 64MB of RAM in the current PSP).

PSP2 is rumoured to be ready in time for a late 2011 launch. Pictures of a rumoured PlayStation Phone also leaked onto the internet earlier this month.

Via VG247 and Kotaku