The mylo, which stands for "my life online", will only be available in the United States.

The device cannot be used for mobile telephone calls and as such there is no need for a monthly contract or subscription.

Personal communicator

The so-called personal communicator doubles as a portable media player.

It can play music, and screen photos and videos that are stored on its internal one gigabyte of flash memory or optional Memory Stick cards.

It also can stream songs between mylo users within the same network, as long as the users grant permission to share their music files.

Many of the device's functions were touted as part of Sony's PlayStation Portable (PSP) - which was once described by the company as the Walkman of the 21st Century.

It too has wi-fi, can play music and video, display photos and is technically capable of supporting instant messaging and internet telephone calls.

But the wi-fi functionality has yet to be taken advantage of by the company. It is not clear if the mylo will be a rival to, or complimentary to, the PSP.

"Our mylo personal communicator lets you have the fun parts of a computer in the palm of your hand," said John Kodera, a director of product marketing at Sony.

Face competition

The device will face competition from an increasing number of mobile phones that are incorporating wi-fi technology, as well as Microsoft's forthcoming Zune player and a slew of so-called ultra-portable PCs.

Danielle Levitas, an industry analyst at market researcher IDC, told AP that the mylo was a "unique, compelling" product, but said it might fare better at a lower price of $299 (£165).

Although wi-fi is spreading across colleges, coffee houses, airports and entire cities, Mr Levitas said the wireless technology was not yet ubiquitous enough to help Sony break mylo out of a niche market.

"You need enough wi-fi out there to make this a compelling product to reach a wider audience," he said.