Is Microsoft Working on an Answer to the DS, PSP, iPhone?

By Brian Crecente

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Team Xbox is reporting that Microsoft is in the final design stages of a new digital entertainment handheld, one that would feature Live Anywhere and blur the lines between the Xbox 360 and Zune.

Reached for comment today, Microsoft reiterated that they have been saying since January that they will have new hardware and software for the Zune this year, but that they're not giving out any details yet.

The device, codenamed xYz, is said to offer both gaming and media playback as well as internet connectivity, but no phone.

"Although the Microsoft handheld is definitely a converged device, this is not a Zune Phone." The source added: "Microsoft won't compete with its Windows Mobile customers."

Rumors of Microsoft expanding their Zune device to be more competitive with the iPhone and portable gaming devices have been circling for quite awhile. And Microsoft is certainly still working on Live Anywhere.

When I spoke with Microsoft's Larry "Major Nelson" Hryb during PAX last year he said it was still being worked on and Microsoft mentioned it at last year's Electronic Gaming Summit, very briefly.

Maybe this is the hold up? It would certainly give Microsoft something else to talk about at E3 later this month.

Microsoft Working on Digital Entertainment Handheld [TeamXbox]

oh God get that home buttong away from the D-pad!

Lets see what happens at E3.

halo on the run.....awesome..

I'd go for some mobile play that was on the same graphical level as the Xbox. Maybe some compatability? I wouldn't mind playing some KotOR when I'm on break at work and perhaps Halo 2 with the device? Online halo 2 on a mobile device... that would be pretty awesome... and not to mention XNA

It cud be as bigger than last year's Final Fantasy news if it is at E3

Nope. Tons of reasons why they wont and at the very least not until DS2

and they are?

Yeah, who wouldn't want to pit a brand-new piece of expensive personal electronics with huge up-front costs to the manufacturer against established market leaders in the midst of a global economic recession?

I'll buy this 1st day.