According to sources at Microsoft, the firm is developing a product that combines video games, music and video into one handheld device.
The Microsoft product would compete with Sony, Nintendo and Apple Computer's products, including the iPod. And Microsoft has some of its most seasoned talent from the division that created its popular Xbox 360 working on it. Game executive J Allard leads the project, and its director is Greg Gibson, who was the system designer on the Xbox 360 video game console. Bryan Lee, the finance chief on the Xbox business, is leading the business side of the project.