It appears that Microsoft is developing games for the DS handheld console from its arch rival Nintendo. This information came out in the form of two job listings on the official website of Rare, a Britain-based game developer which is owned by Microsoft.
The first advertisement, under the "Artist Vacancies" subsection, calls for submissions from "EXPERIENCED 3D ARTISTS (NINTENDO DS)." The position requires a "Good understanding of 3D packages (preferably Maya), strong modeling and texturing abilities, imagination and motivation are all required from anyone hoping to join our Develop award-nominated team in creating key DS titles."
It's not official yet as but it seems likely that the company will start publishing games for the Nintendo DS. More information at Gamespot