On Jan 27 we reported that the rumours involving Mircosoft working on a portable handheld gaming device was a distinct possibility after Xbox boss Peter Moore told Business Week that if MS were ever to make a handheld, it would most certainly include gaming along with music and video.

Joystiq reports [via gameshizzle] that Dean Takahashi of The Mercury News broke news this morning that Microsoft is currently working on a PSP-like portable gaming device that has video, music, and games too. These all were speculated in the rumours that were floating about the upcoming MS system.
Anyway, the reports are that J Allard is leading the team, with Greg Gibson, System Designer for Xbox 360 and Bryan Lee, Chief for Xbox business.
Sounds really good, especially when you have something like an iPOD and a video-capable gaming device that you can move around with.