If you ask MS they do do handheld gaming its called, WMP7 and soon to be Windows 8 tablets, they run xbox live and have games with achievements, online and leaderboards, so yeah they are in the business already, there just in the camp that feels a dedicated device is not the answer.

Its Vita all the way for me tho.

I have to say no. Without Japan (which I assume would ignore it) and coming so late to an area that is already under threat from tablets, smartphones I think any MS hand held would struggle.

If they were going to do it I think they'd have to:

make sure the handheld can also be used as a controller for 360 offering extended capabilities
get Halo and CoD on it
push it very, very hard in US

But like I say I think no.

Depends on what you mean by succeed. I voted yes as I think if Microsoft launched a proper handheld gaming device they could break into the market and break even or even make a profit. However is that the level of success you were refering too?

I think a Microsoft handheld could probably capture about 20% of the market, taking share from both Nintendo and Sony. I think Nintendo would still come out in first, with Sony second and Microsoft third. But I would still consider it a success.

Of course Microsoft would need the same stellar first party software 360 recieves, meaning a new Halo for launch. Give it a good Gears spin-off a Forza title and some other hot properties at launch. I'm sure the handheld console would sell, also give it Live compatability with XBLA full catalogue of games availible on the new handheld day one.

I think Microsoft would have a fighting chance, of course their first entry into the handheld space would not topple Nintendo or Sony. But their second entry could possibly take second place and if Nintendo makes another big mistake heck MS could be looking at challenging them for first.

Of course the biggest hinderance to Microsoft's ability to take the console or handheld market is Japan. Japanese gamers just aren't interested in Microsoft's properties and consoles. So I think Microsoft would once again hit that road block!

But yes I think a handheld Xbox would be successful!

I don't think it would, and if anything happens, it will make them lose the next generation console wars as well, at present, they have just enough first party studios to compete with Sony and Nintendo, but with a handheld as well, they'll split their titles and I think that would make them lose both

those concepts sell me on the idea.

it would have to be more then a gaming device and i still see it doing to well

No.

Japan is as large of a market for handhelds as the Americas is. Being American, it will sell terribly in Japan, making it only a competitive console in Americas, and maybe EMEAA. At best it would sell half as well as a DS.

Also MS doesn't have handheld oriented IP's. Halo, Alan Wake, and Forza are great, but it's RPG's and platformers that sell on handhelds. Only MS brand that could sell decently would be Fable.