It sounds like a very half hearted attempt.
http://www.dbtechno.com/gaming/2008/05/06/microsoft-to-battle-ds-psp-with-zune-xna-games/
Microsoft To Battle DS, PSP With Zune XNA Games
Washington (dbTechno) - According to reports, Microsoft is planning to try and join the handheld gaming market very soon. They will try to compete with the likes of the Nintendo DS and Sony PSP with games on the Microsoft Zune.
The Zune games are going to be featuring ad-hoc wireless play for up to 8 players.
The Zune is also going to feature 16MB or RAM for games alone.
Currently, Microsoft has 4 games up and running with the Zune XNA including Zauri, Hexic, and others.
It has also been confirmed though that the device cannot support any type of hardware 3D acceleration.
