Zune-Xbox gaming device in the works?

Rumors continue to surface on a potential Microsoft portable entertainment device that will interface with the Xbox 360 and feature gaming capabilities. A source says the device is called the xYz and that it's designed to compete with the iPod Touch.

T3's rendering of a Zune-Xbox portable gaming console. T3.com

The Zune rumor mill has been churning for a while, with leaks of an alleged ZuneHD and maybe even a Zune smartphone. The latest rumor gathering steam is sort a riff on previous rumors: Microsoft is developing a portable digital entertainment device that bridges the gap between the Zune and the Xbox 360.

Team Xbox, which ran a story back in January with a similar theme, is the site behind the gaming Zune rumor. Team Xbox's anonymous source had some juicy tidbits to throw out, saying the Microsoft handheld, which has been dubbed the xYz, will be "unlike anything on the market today" and that we should think in terms of a mashup between the Sony Mylo, the PSP, and the iPod Touch. The source, Team Xbox says, wanted to make clear that device "lacks access to a phone network."

The article goes on to note that the graphical interface found in the New Xbox Experience will make its way onto the handheld. "Buy a song, a movie, or a TV show on your Xbox, play the content later on the handheld or the other way around," the source said. "Play an Xbox Live Arcade game either on your Xbox or in this handheld." Sony's been trying to move toward a similar relationship between the PS3 and PSP but it remains a work in progress.

So, is the rumor legit? Will we see a new portable entertainment system from Microsoft this year?

We're willing to buy into this one--to a degree. Our second-hand sources confirm that the Team Xbox post is basically on the money and that Microsoft is indeed prepping a device that's designed to compete with the iPod Touch, not the iPhone. As we said, we've been hearing bits and pieces of this rumor before. For instance, some alleged ZuneHD specs that were circulating earlier referred to "3D gaming" capabilities for the device. So it makes sense that the Zune HD--or Zune xYz--will have some tie in to Xbox Live Arcade games. And hopefully, Microsoft will having something to say about it at E3 next month.

What do you guys think? If true, is this a PSP, iPod Touch, and Nintendo DSi killer all rolled into one device?

(Source: Gizmodo via Team Xbox)

 

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