Zune and Xbox 360, combined!

There is one juicy rumor that Microsoft is working on a portable gadget that combines the Xbox 360 with the Zune. As a Xbox fan, I will buy it when it launches.

The project, codenamed "xYz," is said to feature a WVGA touchscreen and a way to play music and movies on both the device as well as the Xbox 360. Basically, it's going to be a connected handheld gaming system with rich multimedia features. When I first heard this gadget, I think it sounds like a PSP with smarter connectivity. And I believe Microsoft is meant to compete with Apple, Sony, Nintendo, but also Google through implementation of Live Search—maps, news, etc.

Sounds interesting, but will it actually come to exist? Time will tell.