http://news.teamxbox.com/xbox/19639/Microsoft-Working-on-Digital-Entertainment-Handheld/

A recent budget cut to the Entertainment and Devices division, which includes the Xbox, Zune and Windows Mobile units, has revealed Robbie Bach’s group was definitely expending lot of money in R&D; as much as $260 million in only six months; so that figure confirms they were definitely working on something new -- and I don’t think it is the third Xbox home console.

Could the longer-than-expected recession affect or completely cancel the launch of a brand new platform such as a portable Xbox? Time will tell.

Live Anywhere

Buy a song, a movie or a TV show on your Xbox, play the content later on the handheld or the other way around. Play an Xbox Live Arcade game either on your Xbox or in this handheld.

The source explained that many things Microsoft has implemented in the past, such as attaching your Gamertag to a Windows Live ID, will show this handheld is just one step in a carefully planned strategy that involves several Live branding services.

The source also said that the graphical interface found in the New Xbox Experience will make its way onto the Microsoft handheld. The NXE user interface will be even easier to use on the handheld than on the Xbox 360, the source claimed. (Cover Flow-like navigation?)

“When this handheld arrives, people will say it is Microsoft’s response to the iPhone, the Nintendo DS, the PSP, and so on, but it will be pretty evident that this device, its software, and services have been in the works for a very long time,” the source added.


Killing Four Birds with One Stone

According to one source, Microsoft will address several competitors with this handheld: Apple, Sony, Nintendo…and Google? “Yes, Google,” the source said.

Is the device really that far-reaching that it can serve as a competitor to Google? This Microsoft mobile device will supposedly offer many Live Search services, such as Maps, News, Traffic and Video, and in this way, Microsoft would be counter-attacking the Google phones without competing with its Windows Mobile customers that manufacture mobile phones.

Microsoft is about to release Windows 7, but they said that they already starting working on Windows 8. that might be the answer, since Vista for Microsoft did poorly in sales, revenue, etc.

Zune HD & Windows Mobile 6.5 and 7....

That's not the Entertainment and Devices division.

 lol. Only $260 mill development resources for a new Windows? That would be reeeally cheap.

Zune HD & Windows Mobile 6.5, surface, office for mac, other shit we dont know about


Entertainment and Devices division is massive, and with sony changing the way they are reporting stuff we will never know if sony and MS are truely making money/ losing money and developing for their platfroms

I admire the sleuthing efforts, but I have to agree that they're pretty much useless. That money could have been spent on any number of things.

And why are they so sure it's not Xbox 3, anyway? It seems to have as good a case anything - the 360 was released about 3 and a half years ago, right? I'm sure they'd prefer to start developing the successor too early as opposed to too late.

oh im sure they are working on it (as well as sony and nintendo working on their next ones ), we just know many other high profile EDD devices are in the works, windows mobile is getting some major work, and zoon HD rumors have been over board. and they have announced work on new office for mac which is always resource hungry.

Id say its a combo of every thing and sticking to my views here no new consoles from anyone till 2012

zune HD is a given... possible slimbox?That would do well for sales.. how about giving us those dreamy grey/blue dev 360's.. THAT would skyrocket sales...for about 2 wks...

Zune HD, Xbox 360 Xlim and that fancy-doo-dah camera.

Still, good to know the division was bringing in a far greater share of profits then the quarterlys would convey.