Zune-Xbox gaming device in the works?

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

(Credit: 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)

[agriffith96]

All lies of the devil at this point. MS is probably just going to release a multitouch Zune that is able to sync to TVs better for watching videos. And then they'll add Movies and TV shows to the Zune Marketplace. Maybe even offer two tiered Zune Pass. A music and a movies pass. That's my vote. I could be just as wrong as the next guy.

[Random_Walk]

One word: "vaporware".

I strongly suspect that you'll be buying Duke Nuk'em Forever at your local GameStop before you'll be buying this device ;)

[DMAN3k]

If the Zune can run DirectX, you might as well give them the handheld gaming crown now despite all the hardware malfunctions it will have!

[terminalblue]

i love my zune and my 360....but that thing is hideous

[Get_a_life_Leo]

Two years too late.

[WebBuddha]

Never too late to innovate! In case you haven't noticed, but for about 3 years not that hasn't happened much out of Cupertino or Redmond!

[dominiej]

This device and the ZuneHD are one in the same...

[The_happy_switcher]

Ha ha, both of those products have been HUGE money losers for Microsoft. Don't they ever learn? Maybe two bricks tied together will float better than one. This is what happens when you've got billions to **** away I guess.

[myles taylor]

Interesting looking device. I hope they come out with a viable competitor to the iPod Touch, as we've yet to have one. Competition drives innovation.

However, Apple has a good thing going with the Application base of the iPhone working with the iPod Touch. It's going to be hard to compete with that.

[trgdr777]

There probably will be a touch screen Zune, and like the current Zune it will probably play games, but the rest of these rumors don't seem likely. This speculation is getting out of hand. I wish they'd just show off the new Zune, so everyone will stop with the rumors already.

[Constable Odo]

Being that Microsoft intends to go heads-up against the PSP and DSi, it isn't going to be an easy climb. I wonder what makes MS think that they can make money from this venture. MS just cashed in some bonds for $3.75 billion, so I guess they're going to throw it away on this mobile gaming device. They could have done this years ago when the economy was better. Why bother now?

[megustansalchichas]

the current zune plays games. it just needs a better controller.
Add accelerometers and a touch screen and you've got something like the ipod touch. not difficult to do, why not do it in to the next gen? of course it'll be able to play games, the question is how.
This is not a hardware problem (assuming the harware is great for playing games), this is a business execution problem: what properties are you going to get that make it the device worth owning? music is not it, since everyone can get music and put it on an mp3 player. video? remember when they were calling the ipod the 'video ipod'? nobody watches video on mp3 players, it's just a schtick that needs to be there so you can say it's there. games? here's where MS has an advantage right now.
But
If I can plug in my headphones and play the original version of Halo on the bus on my way to work, then there's incentive to buy this machine. The PSP is a great handheld gaming device, but it's a little bulky for carrying everywhere. if MS can replicate the PSP graphics quality, provide gigs of storage, provide portable Halo, make it a relatively open platform (world of goo, anyone?) and keep it only slightly larger than their current large zunes, at $249 it'll sell enough of these to break even IF the new PSP is not an improvement over the old one (one thumbstick? what?). Here is where it gets exciting. will sony fumble this fall? millions of PSPs are due for replacement next xmas....

[og_gta]

http://www.neowin.net/news/main/09/05/13/microsofts-zune-hd-set-to-hit-amazon-in-september

Read up....

[SNOOP_ROCA]

If the new zune is like an xbox portable, I'll defiantly get it

[strongpimphand]

look...i love my 360, and i love my zune....but to "bridge the gap" means to me that this portable device better replace 1 of them!

elsewise it'd be another sega situation where there are too many hardwares and not enough softwares

[ajnauron]

Dual. Analog. Sticks! Come on, MS!

[stockyjoe]

Love my Zune 120 but this thing who would want that?

[IronWarlord]

Microsoft is going to announce it in June and who ever made that image of the new zune should new design portable devices as a job. The real one looks alot like a square ipod touch with a wider screen.

[jbelkin]

Well, this will be the last hardware device MS releases then before folding up shop or slinking back to being an enterprise software company (where they belong) ... The Xbox division is still about $15 billion in the red - the Zune about $1 billion and this device if it gets released in 2 years? Another $10 billion down the drain to get about 15% of the market - that should pretty much wipe out MS' cash flow. Ms has had ZERO consumer successes since 1998 (watches, Bob, Vista, Zune, MSN, webTV, HD DVD, Plays4sure, WINCE, etc, etc ...) whatever they choose is EXACTLY what consumers do NOT WANT. They just don't get it and never will. And the Xbox, other than being $15 billion in the red, by refusing a recall for the red ring and other death knells, they prefer to poison the name slowly ... what has it really done for MS - basically convert 85% of $5k PC buyers to buy a $200 device? Effectively killing off innovation on the PC side since no one has margins at $400? And now, to put the final nail in the coffin, MS is advertising with tech ditz's that PC have 3 features at most and should cost you no more than $900? MS has been stupid for a long time.

[4r3a1]

If this device holds true, i doubt that it would have the success of the ipod touch. Apples app store is king of the hill.