Microsoft has sternly declined to enter the handheld gaming market, and insists it isn't changing it's mind any time soon. And that may be true... for the Xbox division. But with MS smartphones doubling in number every year, with better mobile processors, higher-bandwidth cellular, and wider-range WAN technology coming out all the time, I see them pouncing on the handheld market like a starving hyena in 2-3 years.
They're already hinting at integration between smartphones and Xbox Live, allowing cross-communication with buddies who are online on Live, and possible viewing of stats and "downloadable game content". This is where it starts - the day Xbox Live Mobile debuts is the day Sony and Nintendo had better tighten their grips on the handheld market.
They start by offering Xbox Live Mobile services for cellphones and smartphones. This starts with communication link-ups, stats viewing, maybe trailer downloads. They start offering downloadable games you can buy with points from your existing account. Then mobile games start featuring Achievements which affect your Live Gamerscore. Players start seeing games that offer interaction between the version for their Xbox and the version for their phone.
Then, that's when the unthinkable happens: Microsoft releases a new hardware unit, seeking the same glory Ngage failed to achieve, an all-in-one cell phone/smartphone/handheld gaming console. Actually, I'd bet good money it'll be an MP3 player, too - and probably a camera (maybe an option, like the regular and deluxe 360 packages?). I see games being purchased solely through direct-download - possibly a retail push with a flash-based format, like the SD-based Nintendo DS.
Personally, I still love my GameBoy Advance SP, and I've not yet been impressed enough with the Xbox 360 or the PSP to buy one. But, given a handheld offering from MS, I might have to give it a spin.
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