Microsoft readying PSP challenger, reports say

Published reports claim that Microsoft is developing a portable gaming device that also plays video and music.

Microsoft is designing a new handheld gaming device that can also play music and video in a potential challenge to market leaders Sony, Nintendo and Apple, according to published reports.

The company has assembled a crack team of engineers from its Xbox division to work on the product, which may take a year or even two years to reach the market, the reports said.

The project is being led by game executive, J. Allard, and directed by the system designer behind Microsoft's Xbox 360 console, Greg Gibson, according to a recent report in the San Jose Mercury News.

Microsoft reorganised its gaming and entertainment divisions to assemble the team for the project, an indication of how seriously it is about building a successful rival to Sony's PlayStation Portable (PSP), the paper said.

The Mercury News, and a similar report in the Wall Street Journal, cite unnamed sources familiar with the company's plans. The Journal story said the device could possibly ship by the end of the year, although the Mercury News said it would be a year or two before it is ready.

Microsoft declined to comment on any plans for a new product.

Rumors of a new Microsoft device have been circulating for months, in part because chip company Transmeta confirmed it was providing design services for a new, unspecified Microsoft project.

Transmeta's chip technologies help reduce power consumption, an important consideration for portable devices.

Microsoft recently took the wraps off of one secretive effort, its Origami project to build ultramobile PCs. The new gaming device appears to have a more purely entertainment focus, the reports said. Microsoft trails Sony's PlayStation2 in the home console market, and Sony and Nintendo's market leading products in the portable gaming market. The company also has yet to come up with a reply to Apple's iPod music player.

Trying to build a device that combined both gaming with music, and even video as well, might not be the answer, a principal analyst with research company Gartner, Daren Siddall, said. The trend in music players was towards small, while gaming machines needed to be big enough to accommodate comfortable controls, he noted.

"When you start converging the devices it becomes much more experimental. You have to compromise somewhere," he said.

A principal analyst with Forrester Research, Paul Jackson, said the music-playing functionality was more likely to be an extra feature, rather than a core selling point of the device, which was likely to focus on gaming.

Apart from the Xbox, Microsoft did not have a great track record designing hardware products, he said. The video-playing Portable Media Centers it helped design and which were sold by partners such as Samsung and iRiver America were relatively expensive and locating content for the devices could be easier, he said.

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