According to The Diffusion Group, Microsoft is expected to leverage its Xbox franchise to enter the portable game console market in late 2007 or early 2008. According to the report, Microsoft's first portable console would be similar to Sony's PSP.

"Microsoft has been waiting on the sidelines until its gaming console and software business reached sustainability, all the while watching closely how Nintendo and consumers in general would respond to Sony's PSP," said Thomas Wolf, a portable media analyst and co-author of TDG's latest report. "With global PGC revenues expected to reach $3 billion annually by 2008, and with only Sony and Nintendo active in the PGC space, Microsoft has before it an incredible opportunity. It has a critical brand presence in the console space, the breadth and depth of gaming titles, and the marketing clout necessary to enter this space and win decent market share."

According to TDG's report, Microsoft has been evaluating two options regarding its portable gaming strategy: licensing a version of its Xbox OS for others to build portable hardware designs upon, or introducing its own branded PGC.

News-Source: http://www.teamxbox.com"