IMO for this to have any chance against the Switch 2 it needs to be able to run PC games. Ps5 is already struggling with very few games (with most of them likely not working in such a handheld format), it needs something to sell on.

A handheld in development now will have at least launch-PS4 level of performance. Also, PS5 games just need to ship a Low Graphics preset most game developers make for PCs anyway.