Gaming is a huge business with many different game consoles and computer games selling as well as movies and other mainstream consumer technology products. Sony has offered its PSP for several years now and Nintendo has been very successful with its DS portable.

Microsoft has had its Xbox game console on the market for a long time, but has never ventured into the portable game console realm. According to sources cited by TeamXbox at Microsoft, a new Microsoft "digital entertainment handheld" is coming, though there are no specifics on a date.

The product is called the xYz internally at Microsoft according to multiple sources that spoke to TeamXbox on condition of anonymity. The xYz internal codename is an attempt to show that the device sits between the Zune and the Xbox platforms.

The device will reportedly offer mobile gaming and multimedia playback along with internet access in a portable form factor. TeamXbox asked about the name of the device and was told by one source, "As far as I know, the name of the device has not been decided yet."

Another source cited by the publication claims that the mobile device has been in development as far back as December of 2008. One source describes the device as, "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."

That last statement is very telling. This is apparently not the long rumored Zune phone and in fact; sources cited by TeamXbox claim that Microsoft is very clear that it will not compete against its own partners who sell Windows Mobile devices.

One source said, "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 is rumored to have a WVGA touchscreen and hardware features not found on any other handheld on the market. While the Microsoft sources weren't specific about the hardware, TeamXbox takes a few guesses.

One possibility that would qualify as hardware not found on other devices in the market is the NVIDIA Tegra SOC. Tegra hasn’t made it into the market in a big way since it was introduced back in 2008. Tegra could power all of the functions the Microsoft sources claim the handheld device offers and would qualify as hardware not found on devices on the market.

The bit about providing internet access, but not needing a mobile phone network says something about how Microsoft plans to offer web access on the device. 3G and LTW are seemingly ruled out if that statement is accurate since they are mobile phone networks. That leaves WiMAX as a possibility, but that makes little sense given the exceptionally limited availability of WiMAX in America. It would be very odd if Microsoft launched a device that focused on Internet access when the vast majority of consumers have no access to WiMAX networks.

One interesting aspect of the device is that it will supposedly allow users to buy a movie or game on the mobile device or on the Xbox and watch it on either device, as they want. The handheld is also said to use the New Xbox Experience graphical interface.