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Update: Gizmodo has already debunked this rumor. Sorry guys.
Reports have claimed that Microsoft is currently in the developmental process of creating a mobile platform that mixes many elements of the Xbox and Zune – earning it the nickname “xYz.”
The rumored handheld is reported to be “unlike anything on the market today … think of a mashup of the Sony Mylo, the PSP, and the iPhone… errr, the iPod touch; [the MS handheld] doesn’t need access to a phone network. Although the Microsoft handheld is definitely a converged device, this is not a Zune Phone. Microsoft won’t compete with its Windows Mobile customers.”
The device will supposedly be based off of Live Anywhere, for the most part. “There will be a single online marketplace; the lines between the Zune, Xbox Live and Sky marketplaces will blur when the handheld launches.”
Given that both Nintendo and Sony have strong footholds in the handheld gaming sector, it seems like a natural progression for Microsoft to move here as well. Let’s just hope that this rumored handheld takes less pages from the book of Zune and more pages from the book of Xbox.