A while back there was speculation that Microsoft was working on a portable system which would compete with the PSP and iPod -- or as annoying people put it, "A PSP/iPod killer!" Not soon after, MS unveiled Origami, which was really more of a small tablet PC, but most assumed that must have been what the rumors were about.

And yet, it seems, the rumors persist, with a blog at the Mercury News saying that this project, unlike Origami, is specifically designed to be a multimedia game-playing device like the PSP. Few details on the system itself are known, as it appears to still be in early planning stages, but the article points to the recent re-organization of the company as evidence that Microsoft is serious about pushing the project forward.

The approval of the project spurred the reorganization of the leadership team in the Home and Entertainment Division in December. In September, Robbie Bach, formerly the chief Xbox officer, was promoted to lead the Entertainment and Devices Group, which combined the Xbox with other mobile and entertainment businesses in one of four major product groups.

Then in December, the jobs of the top Xbox executives were broadened so that they could manage all of the businesses related to the broader Entertainment and Devices Group, which included the Xbox business, mobile devices, MSN, music, and home productivity software. Allard, whose group designed the Xbox 360, was named to head "experience and design'' for the entire group.

Sources say that the reason for the reorganization was to bring Allard, Lee, Gibson and all of the relevant businesses into a single group, which is supervised by Robbie Bach.

The article also notes that Microsoft has contracted a company called Transmeta for a "secret project." The company's engineers "work on ways to take the power out of computing chips so that they can be used in handheld devices with long battery lives."

You note that in these articles, no one seems to be focused on making a "DS killer." Maybe Nintendo's got the right idea, they keep trucking along making money and everyone ignores them. Why would Microsoft focus on making a multimedia game system when the one that's already out isn't doing as well as hoped? Why in God's name do we need three portable systems on the market? Shouldn't Microsoft worry about stabilizing their place in the console market first before worrying about the handheld market? Anyway. It's too early to worry about questions like these, I suppose. The project is still young, and a lot can change. As the article notes, MS has already considered twice before about producing a handheld, only to nix the idea down the line.

Source: Next Generation