I think at some point MS will inevitably enter the handheld division. But I think they're going to wait until the tech meets both 360 specs (bare minimal )and advanced peripheral specs.
In other words, I think when handhelds evolve to a point where they are no longer considered the proverbial hand-held...then MS will debut their portable device.
Poratable VR or AR..more than likely.
Insert Coin. Press START. You Died. Continue?