I think its too much for them to take on personally, they have little 1st party devs as it is without splitting work between a console and a handheld.

Now a Zune mobile with gaming compatibility like the Iphone ;)

I really wouldn't count on it

if they did, they better keep game achievements. :) One of the best things to happen to gaming.

@endimion :

We are talking about a handheld here.. with a screen that has a resolution of 320*480 or max 640*480.. what you would need 100GB for is beyond me..

current UMD at 1.8GB is sufficient enough for SONY. Nintendo supports 256MB max.

I expect cart capacity to jump to 8GB in the coming years.. but since we can fit games like GOW2 on a DVD9 I fail to see how a handheld with 1/5th the power of the 360 would need all that capacity.. especially since it renders at 1/7th the resolution.

As far as milking the customers goes.. videogame makers usually take a loss on their hardware. There is no point shoving in a 100 gigs of flash onto hanhelds,when consoles can do fine without them..

I really like the interoperability between the PSN, PSP, and the PS3. I think MS could create something really nice with XBL, 360, and a hand held. They put their toe in the water with the Zune, and it didn't really work out for them. Although I do think they are making some money on it, all signs point to them dumping the platform in the future. There are already 3 platform holders(Nintendo, Sony, Apple) in the hand held space, it would be difficult for MS to get into it. But it would be interesting.

If the Zune hadn't flopped I would of said it was a real possibility. Now, it seems unlikely, at least anytime soon.

Mind you, I didn't really expect Microsoft to jump into the console market when they did, so who really who knows what new directions they'll go in over the next 5-10 years.

Microsoft has stated in the past that they have no intentions of entering the handheld market. What's more is that they've allowed their first-party franchises to be released on the DS.

Any rumors or speculation, therefore, are fool's talk.

^^totally agree. Handhelds are to Nintendo what OS is to MS.

If MS released the xbox to stop sony from dominating the home entertainment market they were watching the wrong horse.

Apple are now in a far better position than sony ever was to do this.

Now with appleTV beginning at last to take off and literally ever major audio/visio manufacturer producing TVs and Stereos with the iPod dock built-in watch this space.

You really don't think MS is aware that Apple has absolutely destroyed their Zune business, and is dramatically increasing marketshare in the OS market?  Go look at their financials, or read any investor/financial article related to Microsoft and you will see they are very aware.

I actually made an "Unreal" prediction on DarthDevidem01's wall that Microsoft was going to announce one this year at E3. Strange if it would happen.