In the latest book from Dean Takahashi, The Xbox 360 Uncloaked, he states that the Xbox 360 team was split after the release of the Xbox 360, with half moving into a portable gaming project, and the other half handling the post-launch production cost reduction. Supposedly, the new unnamed portable would be a competitor to the Nintendo DS and the Sony PSP, but very little detail is available at this point. Still, given the launch of the UMPC, this might be a glimpse into what Microsoft is expecting. However, significant cost reductions would have to be made in order to make something cost competitive. With the DS at $129 and the PSP at around $200, Microsoft would have to anticipate taking a serious loss on each unit, or vastly simplifying their hardware. Also, the DS and the PSP (and the GameBoy Advance) all use non-standard media as their game format; would Microsoft be willing to push into getting their own media type created? Neither the Windows Mobile nor the UMPC format seem close to a valid form-factor and price point for a mobile game unit, so the success of such a handheld is going to depend on how well Microsoft understands the trade-offs.

Read More | GamesIndustry.biz