Taken from T3...

Despite countless rumours, it would appear that Microsoft will leave Nintendo DS and PSP to duel for handheld supremacy. Yes, a pocket-sized Xbox isn’t on the cards, according to Neil Thompson, head of Xbox for Northern and Eastern Europe. We spoke to him earlier today, and asked whether he could categorically state that Microsoft is not currently developing a handheld gaming device.
“We’re not even thinking about that at the moment. Handhelds, in the way you would think about a handheld like a PSP? No.” Thompson stated. He went on to say, “the mobile phone market offers us a really good opportunity to capitalise on the hundreds of millions of handsets that are out there, and give people a chance to connect that with other entertainment experiences”.
Sadly our vision of an Xbox handheld dips back over the horizon. Although we can’t help but feel that the story isn’t over just yet.

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