Fresh off its early lead in the next-generation console wars, Microsoft appears poised to put out a portable video game device by late 2007 or early 2008, according to the Diffusion Group. The idea, the firm said, is that with Xbox 360 firmly entrenched as the (current) market leader, Microsoft is now ready to take on the lucrative handheld gaming device market, especially since there's a predicted $3 billion in annual sales at stake. Story continued at C¦NET
Well, everybody though the Xbox would bomb too...however, Nintendo has been very successful with their Gameboy incarnations and the DS. The PSP is also pretty good from what I've seen. Of course, we've also seen the Sega Gamegear fade out, even though it was superior to the Gameboy.