Report: Microsoft Working on Xbox/Zune Mashup

Nintendo has the DS Lite and DSi. Sony has the PlayStation Portable. This leaves Microsoft sitting at the sidelines in the gaming handheld market – but according to an internet report, this won’t be for much longer.

TeamXbox has published an article that it had completed in January, but chose to hold back on it for various reasons. The information may be outdated, but it’s interesting to ponder nonetheless.

According to TeamXbox’s sources, Microsoft is working on some kind of mobile platform that meshes elements of the Xbox and Zune – earning the nickname some are calling it the “xYz.”

The Microsoft handheld is supposed 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.”

Zune phone? No, said the source. “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.”

Apparently the device will make heavy use of Live Anywhere. “There will be a single online marketplace; the lines between the Zune, Xbox Live and Sky marketplaces will blur when the handheld launches.”

This could mean that one could purchase games and videos on Xbox Live Marketplace and later play and view those purchases on-the-go. Read the full story here.

It seems like a natural progression for Microsoft to try to break into the mobile sector with an all-powerful media device that’ll meld the Xbox and Zune online efforts. Perhaps we’ll find out more as E3 nears.