If it aims too narrowly, it will compete against the PSP and DS and be crushed.
If it aims to broadly, it will compete against the iPhone/iPod touch/other devices and be crushed.
Bad time to enter the market.

Actually, it hasn't. It's in the same position it was in last generation.

Yes it has. It's in the same place as the xbox but is selling MUCH faster than it did.

Portable Halo and Gears!

MS has balls.

Portable Gears/Halo are probably a reach though. Definitely Gears, unless they went ultra-tech route with the system, and look how well that turned out for PSP.

They need Japan for strong sales of a portable, and given XBOX's numbers over there, it'll be ugly.

I'm more inclined to believe a Zune/Phone rumour.

Wah! Fake, hopefully.

Sounds like a horrible idea really if it is true. MS needs to focus on conquering the console market before dipping into the handheld market. Don't get me wrong, I'd probably buy one (but I always buy everything because I have nothing better to do, so that doesn't really count for much).

Though I will say dual analog sticks like in the pic would be nice.

Look at all the consoles. The 360 is in second place right now, and while it is selling faster than the Xbox, the third place console, the PS3 is selling faster than the Gamecube, and the first place console, the Wii, is selling better than the PS2.

If Richard, Fred, and Steve go fishing today and Richard catches 10 fish, Fred 4, and Steve, 3, and then tomorrow, Steve catches 17, Fred 7, and Steve 6, then Fred, while having sold more, is in the same position as he was the day before.

The same can be said for the consoles. Microsoft will sell more consoles this generation than they did last generation, but they will still have roughly the same market share give or take a few percentage points, and that's really not good, because in order for their business model to work, they will need a very substantial increase in market share, but as we can see, that's just not happening.

The only brand that's seen any real improvement this generation is Nintendo.

very cool, hope its true. then i can get another handheld, just bought a ds lite tonight, getting a psp this weekend. imagine the original halo with xbl support as the launch title, could easly see over 1 million at launch.

There's no doubt that it would see strong launch sales, but afterwards is what's in question.

Ms would face much stiffer competition in the handheld market. The DS is a monster, and the PSP is nothing to write off. That being said, Microsoft would have to do something totally new and appealing to make any significant inroads into the market, and being that Microsoft isn't a creative or innovative company, this is very unlikely.